County Homes Continue to Get Ever Less Affordable

Despite prosperous times, the percentage of residents who can afford a home in Orange County and throughout the state continues to decline.

Of 173 metropolitan areas nationwide, Orange County ranked 15th from the bottom in the second quarter, according to a new poll by the National Assn. of Home Builders, a Washington, D.C., based trade group.

Only 35.7% of Orange County’s population could afford to buy a typical home in the last quarter. San Francisco was the least affordable market at 5.9%, the survey found.

Orange County’s rating has fallen four notches since the first quarter, and analysts say rising housing prices likely will knock more people out of the market through 2001.

Prices of existing homes, already at record levels, should move up another 4.3% next year, for example, said John Burns, an analyst at the Meyers Group, an Irvine real estate research firm.

Indeed, 13 of the nation’s 20 least affordable markets are in California, based on median family income, interest rates and home prices. Although the trend is more pronounced in the state, rising prices are putting homes out of reach of more people throughout the country.

Households with an income of $50,200 could buy only 58.4% of the homes sold nationwide in the second quarter, the lowest level in nearly eight years, the home builders group said.

The trade group attributed the decline primarily to higher mortgage rates, which rose on average to 8.20% from 7.93% during the three months.