Median county home price too high for most

Alicia Robinson

With housing prices continuing to climb, it’s no surprise to area

real estate brokers that fewer and fewer people can afford to buy a

home here.

Only 18% of Orange County households could afford the

median-priced home in the county in November, according to data from

the California Assn. of Realtors. In November 2002, the housing

affordability index was seven points higher, at 25%.

Median home prices have risen substantially because of the

shortage of available homes, William Cote of Cote Realty said.

“We don’t have any product,” Cote said. “There’s just not a lot of

homes to sell. The amount of available inventory is less than half of

what it was a year ago, and we’ve seen the prices continue to

escalate so the homes are appreciating between 15% and 20% a year.”

Figures from the Orange Coast Assn. of Realtors show the median

price for a single-family home in Costa Mesa was $599,500 in December

2003, up from $421,000 in the same month in 2002.

In Newport Beach, the median price in December 2003 was

$1,587,500, compared to $1.1 million in that month in 2002, said

Diane Ward, who manages the multiple listing service for the Orange

Coast Assn. of Realtors.

The number of people who can afford a home here has been on the

decline because the consumer price index has only grown about 1.9%,

so wage increases have been correspondingly slow, said G. Christopher

Davis, director of the real estate management program in UC Irvine’s

Graduate School of Management.

“For-sale housing prices have increased significantly faster than

incomes, especially in the moderate- to low-priced ranges, which

contributes to a housing crunch,” he said.

The high home prices have driven down business at the Costa Mesa

Redevelopment Agency, a city agency that distributes state money

similar to a second mortgage to qualifying home buyers.

The agency has given loans to about 10 to 12 families every year

until last year, when only six loans were made, redevelopment agency

management analyst Alma Penalosa said. The agency can give loans of

up to $40,000, but that doesn’t go as far today as it used to, she

said.

“We have the money waiting for people to use it, [but] we haven’t

had the numbers we’ve seen in the past,” Penalosa said.

A recent survey showed that redevelopment agencies in other Orange

County cities including Brea, Buena Park and Fountain Valley are

seeing a downturn in loan rates, she said.

Because this is such a desirable place to live, Cote said,

affordability has always been an issue. As for the rising home

prices, he said, there’s no end in sight.

“As long as we don’t have the available inventory, it’s going to

drive the prices up,” Cote said. “It’s simple math.”

* ALICIA ROBINSON covers business, politics and the environment.

She may be reached at (949) 764-4330 or by e-mail at

[email protected].