Affordability of Housing Worsens in First Quarter

As prices rise in Orange County and across the state, it’s clear that fewer people can afford to buy homes. In the first quarter, according to a new survey by the National Assn. of Home Builders, Orange County ranked as the 18th least affordable area in the nation, up from 25th a year ago.

More people can buy homes nationwide because of low mortgage rates and higher incomes. For example, families earning the U.S. median income of $47,800 could afford an unprecedented 69.6% of homes sold nationwide.

But California is the exception to that trend as ownership costs moved beyond the means of many families, the survey showed. Of the nation’s top 25 highest-priced markets, 13 were in the state’s metro areas, compared to 11 a year ago. San Francisco topped the list. Other Southern California counties rated were San Diego (12th), Santa Barbara (15th), Los Angeles (16th) and Ventura (19th).

Builders say rising prices in Orange County stem from a lack of production. Only 10,000 building permits were issued in Orange County last year, while more than 60,000 jobs were created. Such job growth, using traditional estimates for housing demand, should have generated at least 40,000 units.

A typical home in Orange County soared in May to $241,000, the highest median price registered since tracking began in 1988, according to Acxiom/Dataquick Information Systems Inc.

While 12,000 homes are expected to be built this year in Orange County, economists and industry experts believe the new construction will fall far short of meeting demand. As a result, prices will continue to move higher this year, with estimates ranging from about 5% to double-digit rates.