O.C. Housing Prices to Keep Rising as Demand Outpaces Construction
Housing prices in Orange County will soar above record levels over the next six years because construction won’t be able to keep pace with rising demand, the author of a planning report predicted Wednesday.
Nearly 74,000 new homes, condominiums and apartments--nearly 11,000 annually--are needed in the county by the year 2005, according to the report by the Southern California Assn. of Governments. But that won’t be enough to stave off a housing crunch throughout the Southland, said Joseph Carreras, the group’s housing program manager.
About 10,000 housing permits were issued in Orange County last year, but the vast majority were for high-end homes that are out of reach for many.
About 50,000 permits for housing units are issued every year across the Southland, but in order to meet growth needs, construction would have to rise significantly, to 70,000 units annually, through 2005, the study said.
Projecting that 1 million new jobs will be created in the Southland by 2005, the bulk of them in Los Angeles and Orange counties, the report said the region can expect 500,000 new households, a growth rate that far surpasses the nation’s.
But most of the new homes will continue to be built in the Inland Empire, a lengthy commute from the region’s primary job centers, such as Irvine’s high-tech community and the city of Los Angeles. Only about one-fourth of the region’s home construction during that time is projected to take place in Orange County and Los Angeles, the report said.
For Orange County, already the state’s second most-densely populated area, that means absorbing about 15% of the region’s new households.
A big share of new homes, 11,131 or 15% of the county’s total, is needed in Anaheim, the heart of the region’s tourism industry and where Disneyland is launching a second theme park. Irvine, center of the region’s high-tech industry, needs to build nearly 6,000 more homes, or 8% of the total.
The biggest area of growth must be Orange County’s unincorporated areas, where almost 27,000 more homes, or 36% of the total, should be constructed.
But with the number of available lots declining, and Orange County struggling to meet current housing needs, a greater imbalance in the supply and demand of new homes will push prices well beyond where they are now, Carreras said.
The typical Orange County home ended 1998 at a record $236,000, according to Acxiom/Dataquick Information Systems Inc. And with demand still strong, hundreds continue to sign up for a chance to buy new homes in premium locations in the county.
“The challenge is to sustain building activity we’ve had only the last couple of years in Orange County, and provide enough housing so that you don’t have side effects that result in limited choices on where people can live and in higher prices,” Carreras said.
Although more people, especially in the middle class, are affected by the dearth of new housing in Orange County, the hardest hit are low-income families. About 40% of the county’s households live in overcrowded or substandard units, or spend more than they can afford on rent.
The Southland has four low-income renters for every unit available, the highest disparity in the nation and double the national average, a Center on Budget and Policy Priorities survey found last year.
The SCAG report focused on the total number of housing units that each city in Orange, Los Angeles, San Bernardino, Riverside, Imperial, and Ventura counties is required to plan under state law.
A detailed proposal on low-income housing needs is expected to be completed later this month. Cities will have about a year to settle on the final figures before a report is sent back to the state.
Just as building more freeways does not alleviate congestion, Carreras said that neither will building more housing units solve the problem. Cities need to look more at redeveloping existing homes and apartment buildings, and to find parcels of land in areas that could be converted to housing, he said.
Several city officials in Orange County agreed, saying the housing crunch is caused by myriad factors. Among them: a lack of available lots; land costs that have more than doubled since 1993; and the reduced revenue that cities keep from property taxes.
For many, the effect is an incentive that encourages retail development for its higher source of revenue, rather than housing.
“Housing should be able to pay for itself,” said Bev Perry, a Brea city councilwoman and president of the Orange County division of the League of California Cities. “We’re at a place where we can’t afford to wait any longer to address the housing problem. I won’t say it’s a crisis yet, but if we wait any longer it will be.”
A conference on the housing problem, “Housing Choices: Housing and Community Through 2020,” will take place today at UC Irvine. A full report on SCAG’s preliminary numbers for cities across the Southland also can be found at https://www.scag.ca.gov
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Housing Pinch
Orange County will need to add nearly 75,000 homes, apartments and condominiums by 2005 if it is to keep pace with the region’s burgeoning population. Here’s a city-by-city look; percentages do not total 100% because of rounding.
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Pct. of Homes county needed total Anaheim 11,131 15 Brea 1,036 1 Buena Park 1,017 1 Costa Mesa 1,305 2 Cypress 593 1 Dana Point 433 1 Fountain Valley 336 * Fullerton 1,727 2 Garden Grove 1,309 2 Huntington Beach 2,095 3 Irvine 5,768 8 Laguna Beach 36 * Laguna Hills -30 * Laguna Niguel 1,185 2 La Habra 614 1 Lake Forest 226 * La Palma 89 * Los Alamitos -25 * Mission Viejo 1,108 1 Newport Beach 498 1 Orange 3,154 4 Placentia 1,586 2 San Clemente 2,615 4 San Juan Capistrano 811 1 Santa Ana 1,483 2 Seal Beach 296 * Stanton 635 1 Tustin 3,187 4 Villa Park 22 * Westminster 1,556 2 Yorba Linda 1,547 2 Unincorporated areas 26,534 36 Total 73,877 --
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* Less than 1%
Source: Southern California Assn. of Governments
