LA Times article on California:
“Larger economic forces come into play too. Orange County, for example, consistently has the lowest jobless rate in the state. Although that could be a draw for laborers in states with high unemployment, the high housing prices in the county act as a brake on that sort of migration.”
The Orange County Register reports:
“Orange County home prices took a tumble in January, with the median price falling below $600,000 for the first time in eight months.DataQuick reported today that the median sale price for all residences sold in January was $582,000 – down more than 6 percent from December's record $621,000 but still up 9 percent from January 2005. Sales volume was weak, too, as 2,594 homes sold – down 11 percent in a year. This was the slowest January since 1997.”
Graphic showing median housing costs of OC area:
http://ocregister.com/ocregister/money/housing/article_973459.php
OC Metro:
“Affordability Orange County housing prices keep going up. DataQuick reported that February’s median home price hit a record $555,000. The median for Southern California is about $425,000; for San Diego County, $491,000; for Riverside County, $371,000; for San Bernardino County, $281,000; and for Los Angeles County, $418,000. Orange County remains one of the most expensive housing markets in the country.”
We’ve seen all this before:
http://www.rntl.net/history_of_a_housing_bubble.htm
Last note:
I can’t find the web page that had this data now, but it said that lenders usually look at 3 times base income as the optimal, “safe” lending value price-point. This means that they want to give you a loan for three times your gross income. The median income in Orange county listed for 2002 (the most recent value I could find) was approximately $60,000. So, that means that lenders would prefer to provide up to $180,000 home loans. With housing prices in this area at around $600,000, and with people earning an average of $60,000 in the region, that means banks are having to lend at 10 times a person’s income in order to get them in a house.
I’ve heard it said that less than 10% of the people who own homes in Orange County can actually afford the house they are in. These numbers certainly back this up. When the current housing bubble bursts, the collapse will be huge and felt throughout California.
"Take something you love, tell people about it, bring together people who share your love, and help make it better. Ultimately, you'll have more of whatever you love for yourself and for the world." - Julius Schwartz, DC Comics pioneer, 1915-2004
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May 24, 2006
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