O.C. Housing Market Rises With Recovering Economy

As Orange County’s economy rebounded in 1996, it has sparked confidence in its long-struggling housing market, according to the Orange County Annual Survey released Monday by UC Irvine.

Sixty percent of homeowners surveyed earlier this fall said they thought buying a home in Orange County was an excellent or good investment, up 10 percentage points from last year.

“I think that homeowners in Orange County are feeling that there is a lot more certainty than there was a year ago ,” said Mark Baldassare, a UCI professor of urban planning who conducted the poll.

With the bankruptcy over, the number of local jobs increasing and lingering confusion about the crisis’ impact on schools and public services clearing, Baldassare said homeowners now feel confident that their homes won’t lose any more value.

Of the remaining homeowners in the survey, 30% thought buying a home was a fair investment, 8% thought it was a poor choice--a decline of 10 percentage points from the previous year.

Renters, however, were not as optimistic about the housing market. Only 45% of all people who rent their apartment or home thought a home purchase was an excellent or good investment, an increase from last year but still below 1993 and 1994 levels.

Most industry observers attribute that attitude to the lack of significant rental rate increases in the apartment market, which has made renters less motivated to buy.

“There are some pretty good rental bargains around Orange County and values are not escalating like they were in the 1980s,” said Larry Webb, president of Irvine-based Laing Homes. However, Webb said that the housing market is starting a gradual recovery that could last about four years. He said sales at his company are up 30% from the year before.

However, most Realtors say a full-blown real estate recovery is more perception than realty.

“It’s a good start,” said Allan Gantt, a broker with Century 21 Accent Realty in Fullerton. “But there has been no overnight change in sales. Our sales are up over last year, but only by 15%.”

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According to the survey, Orange County housing is most attractive to those who can afford it. But even among those who say they are barely making enough to pay the bills, 54% say it is an excellent or good investment.

Baldassare said this illustrates the basic lack of affordability in Orange County housing. Many people who are considered relatively well-off report considerable worries over meeting their mortgage payment, he said.

Industry analysts say affordability has declined in Orange County because of the decreasing stock of low-cost attached housing. In the past few years, builders have shied away from building condominiums because of the litigation risk involved and the cost of insurance, Webb said. Because the density of housing has decreased, the average home price has increased.

Indeed, the median monthly mortgage payment increased 4% to $960 from $919 last year, the highest level seen since 1993. The study’s authors say this is largely a result of north and central county residents moving to larger, more expensive houses in south Orange County.

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In addition, many older residents who have small or no mortgage payments are moving out of the county.

Meanwhile, median rents in the county were down to $713, their lowest level since 1990.

South Orange County remains the most expensive place to rent or buy in the county: 73% of homeowners and 63% of renters report paying more than $750 a month for housing.

The survey, which was conducted in telephone interviews Aug. 30 to Sept. 8 with 1,000 Orange County adults, tracks trends in attitudes toward the economy, quality of life and issues that affect the community such as housing.