Commentary: Home ownership in Orange County is at serious risk for many would-be buyers

Home building underway at Rancho Mission Viejo in San Juan Capistrano in 2013.
(File photo / Los Angeles Times)

I often speak of the nexus between public policies that affect real estate practitioners and those that affect everyone else.

Perhaps there is no better example of this nexus than our current affordable housing crisis. While Realtors have trouble finding listings, other people have trouble finding homes.

The strength of this connection is the reason that Realtors are taking the lead on this issue. We often hear the phrase “disposable income,” however, this “income” is about as “disposable” as a soldier’s water canteen. It is our lifeblood when we face times of crisis and enables us to absorb what life throws at us.

But this term is no longer in the vocabulary of many Orange County residents because housing costs consume so much of their income.

According to the California Assn. of Realtors, only 22% of Orange County’s population can afford to purchase a median-priced home. To qualify, a household would need to make $92,571 a year, and this does not include saving for a down payment.

I am sure you can think of someone who has been affected by this crisis — perhaps you, yourself.

Are you a young adult trying to find your path in life? Do you have a young family and need space for your kids? Are you recently divorced and needing to find a new place to live? Are you paying for your children’s college tuition?

If you are married and in your twilight years, you’re probably OK, but at this rate, you’ll soon be part of the only group left to enjoy home ownership in this beautiful county.

The good news is that there are solutions, and Realtors are working to lead the charge. The question is whether we can come to grips with those solutions before we lose an entire generation of homeowners. So, what are those solutions?

More Housing

Ultimately, this crisis is a matter of supply and demand. California is running short about 65,000 housing units a year. During 2016, Orange County added 162,740 new jobs but built only 44,923 new housing units.

This kind of deficit leads inevitably to higher prices. If the Orange County housing market cannot accommodate growth, neither can the Orange County economy. Higher density is difficult for communities to embrace; but with a little creativity, it can actually improve local quality of life.

Less regulation

According to the California Legislative Analyst’s Office, because of labor costs, construction costs, environmental regulations and local development fees, it is $50,000 to $70,000 more expensive to build a home in California than it is to build elsewhere in the country. These higher costs are passed directly from home builders to home buyers and from landlords to renters.

More entry-level ownership options

While we are still far behind the necessary pace of development, we are all witness to the recent development boom.

Unfortunately, most of the new housing units being built are either rental apartments or expensive single-family homes. For many, including me, townhomes and condos are the only avenues into the housing market.

Cities need to work with developers to encourage construction of more of these entry-level ownership options. If they don’t, younger renters will not stay.

Better transit

If homeowners are to absorb higher housing costs, they need to save money elsewhere. Average car loan payments are about $506 a month, and this figure does not include insurance, maintenance and fuel. Home buyers are looking to live closer to work and cut down on long commutes. Solutions like light rail, automated vehicles, rideshare and the location of housing all need to be in the minds of policymakers.

Low-level assistance programs

Homelessness isn’t limited to the chronically homeless. This category also includes families on the verge of being evicted or living in temporary housing. Assistance programs like rapid rehousing are effective in providing a necessary safety net.

Down payment assistance is often essential for first-time home buyers. Without it, the U.S. home ownership rate might look more like that of Germany, where the rate is around 50%. And the negative connotation of Federal Housing Administration (FHA) loans needs to be corrected.

As it is, only 10% of townhome and condo communities are willing to accept these loans. Realtors are in a unique position because the future of their community affects both their home and their livelihood. Realtors are increasingly becoming community advocates and working to influence local policy makers about the importance of making housing more available, more accessible and more affordable.

TONY CAPITELLI is the government affairs director for the Orange County Assn. of Realtors, which is based in Fountain Valley.