Orange County May Lead Nation in Housing Prices

With a median price of $175,000, Orange County may have the most expensive homes in the country.

In a survey of 25 metropolitan areas nationwide--including most of the biggest--the U.S. League of Savings Institutions found the county’s median home price last year leading the pack. The median price for all large urban areas was $128,000.

The high cost of homes in Orange County reflects a diminishing supply of undeveloped land and strong demand for housing. And builders also blame fees charged by local governments to pay for roads and other improvements.

“In 1970, I was selling houses here for $30,000,” said Dale Stuard, an Orange County builder and president of the National Assn. of Home Builders.

“Now it’s $20,000 for the lot before you even start to build the house,” he added.

Four of the five most expensive housing markets in the survey were in California. San Francisco ranked second with a median price of $169,347. San Diego was fourth at $156,919 and Los Angeles fifth at $142,900.

Boston, the only urban area outside California to make the top five, ranked third with a medium price of $161,000.

“People coming here from Boston usually say, ‘Hey, this is just like back home,’ ” said Doreen Benton, an Irvine real estate agent.

“But if they’re from the Midwest, there’s still quite a bit of sticker shock.”

So expensive is the Orange County market that only a quarter of its households can qualify for a loan on an average older home, according to the California Assn. of Realtors.

Despite the high prices, people continue to buy. Sales of houses and condominiums in the county rose 5% last year to 58,260, according to TRW Real Estate Information Services.

And the high price tags don’t seem to daunt buyers.

“Last year, houses sold before they hit the streets,” Benton said. “And we often had three offers for each house. It’s down a little this year, but not much.”

Unlike older urban areas elsewhere, much of Orange County is shiny and new.

“Most places in Orange County are, at a minimum, a decent place to live,” said Michael L. Meyer, managing partner at the Newport Beach office of Kenneth Leventhal & Co., an accounting firm.

“You don’t have a large percentage of very old properties that have depreciated in value to bring down the average, and you don’t have very many slums.”

Only 25 years ago, land was plentiful and cheap in Orange County, and contractors built inexpensive subdivisions that attracted people who were fleeing the higher housing prices in Los Angeles.

Now, much of the land in the northern part of the county has been developed. Meanwhile, Orange County’s economy is thriving, powered by a booming technology sector and a growing services industry. That means demand for housing continues to grow rapidly.

There may be trouble in para dise, however. As subdivisions, office parks and shopping malls proliferated over the last three decades, they have been a factor in slowing traffic to a crawl and have prompted a growing opposition among residents.

Some of those residents are busy gathering signatures in an effort to qualify a slow-growth ordinance for a public vote in June.

The building industry says the proposed ordinance would bring development in the county to a halt. With little new housing being built, home prices in the county would inevitably rise further, they contend.

Opponents seized on the home price survey figures to make their point again.

“The initiative worries me because if you think housing prices are high now, you haven’t even seen how high they can go if nothing else is being built,” said Sanford R. Goodkin, a La Jolla consultant to the real estate industry.

Builders blame the high cost of housing in part on road and sewer fees that local governments began to charge developers in the 1970s.

The League of Savings Institutions survey drew figures from 22,000 mortgage loans made by 857 savings institutions across the country.

Some of the nation’s largest cities--including Detroit, Dallas, Phoenix and San Antonio--were excluded from the survey. The league said it could not get adequate information from savings institutions in those areas.

Still, it’s likely that Orange County’s home prices would still top a complete list of the nation’s largest urban areas, a league spokesman said.

The survey also found that Orange County home buyers had to stretch a little to make the mortgage payments, despite having median incomes much higher than average.

In Orange County, 60% of home buyers paid out more than a quarter of their income in house payments, taxes and utilities, compared to only 40% in other large urban areas.

That amounted to a monthly payment of $1,289 in Orange County, compared to $1,017 in other urban areas.

And the price of a home in Orange County continues to climb. Earlier this week, the California Assn. of Realtors reported that the median home price in Orange County had reached a record $177,900 in December.