O.C. Homeownership Climbs After Falling Previous 2 Years

After two years of declines, homeownership in Orange County rose sharply last year and helped boost the share of Californians who own their own dwellings to a record high, according to a federal report released Monday.

Last year, 57.1% of all California households lived in homes they owned, the highest rate since the U.S. Census Bureau began maintaining annual figures in 1984.

Nationwide, the home ownership rate rose to a record 67.4%, according to the Census Bureau. But home ownership, a key indicator of economic strength and social stability, rose at a faster pace in the state than the nation.

In California, those holding a title to their homes still grew by nearly 1.5 percentage points, or roughly 172,500 households. The jump in the state’s long stagnant ownership level was greater than the 0.6-point increase nationwide.

The ownership rate in Orange County, the least affordable housing market in Southern California, increased to 62.3% last year from 60.9% the previous year. It is still lower, however, than the high of 64.6% in 1997 and 63.2% in 1998.

Despite the improvement statewide, figures show that California still has one of the lowest home ownership rates. Only New York and Hawaii have lower rates.

Some analysts, given the 13% run-up in the median home price to $209,000 last year, were surprised by the results.

“It’s hard for me to imagine why the decline we saw in 1999 was reversed in 2000,” said Leslie Appleton-Young, chief economist at the California Assn. of Realtors trade group.

The trend reflected several economic and demographic changes in California that allowed more people to buy a home, analysts said.

Unemployment hit record lows and incomes rose, especially in the technology sector where huge stock gains last year provided many people with down payments. A larger number of immigrants have reached prime years for purchasing homes.

In addition, key mortgage investors Freddie Mac and Fannie Mae raised the limits on the sizes of loans they would buy. That pumped more mortgage money into the area and allowed more people, even first-time home buyers, to qualify for loans with lower down payments, the analysts said.

Those conditions outweighed concerns over home prices and boosted confidence in the economy high enough that more renters became homeowners last year.

In coastal areas, where high-tech jobs make up a larger share of the local economy, incomes from stock gains also helped make purchases of new homes possible. In Orange County, San Diego and San Jose--three of the highest-priced metropolitan areas in California--homeownership rates rose sharply. San Diego’s jumped 3.1 percentage points.

“Stock options may have allowed people to accumulate a down payment, [people] who would not have been able to do so 10 years ago, particularly those under 35 years old,” said Cynthia Kroll, an economist at the UC Berkeley.

In addition, many landlords with only a few properties took advantage of higher prices to sell their rental units into the home ownership market, said Ted Gibson, an economist at the state Department of Finance.

“It may be that people are saying it’s time to cash in the rental and put the money somewhere else,” he said.

Although home prices have hit records in several metropolitan areas, some counties like Los Angeles have only begun in the last six months to exceed levels from a decade ago. Higher prices in those areas have fueled more transactions. The ownership rate for Los Angeles-Long Beach rose to 49% last year from 48.1%.

Owners have amassed enough equity to sell their homes and move into larger ones, allowing room for new people to enter the market. In addition, more buyers are heading inland where single--family homes are being built at more affordable prices.

But for the state’s homeownership rate to improve greatly in the long run, more housing must be built to accommodate the huge demand, analysts said. Last year, the state produced 70,000 to 100,000 units fewer than what was needed to match growth, according to the state finance department.

Even so, widespread gains were made last year. Out of the state’s 10 metropolitan areas included in the Census survey, only Oakland and San Francisco showed a drop in ownership rates last year. In the Southland, Ventura County improved to 1.5 percentage points to 66.2% and Riverside-San Bernardino increased by less than 1 point to 62.6%.

A more precise portrait of home ownership in the region and in the nation is expected later this year as the federal government releases results from the 2000 Census.