We all know that Orange County’s housing market is really hot, and homes are expensive.
But an interesting recent article in the Orange County Register by real estate reporter Jonathan Lansner argues that the average Orange County home is actually more affordable than your typical real estate index would have you assume.
This is because while Orange County’s housing market is indeed expensive, its job market is also stronger than it has been in 15 years—and there is a large number of people with good jobs that are able to afford more expensive homes.
Indeed, the last time Orange County’s median home price was “affordable,” according to your typical index, was during the Great Recession, when your average person was suffering in the job market and not thinking about buying a new home.
Lansner recently took it upon himself to calculate his own affordability index using home prices, job trends, income levels, and mortgage rate patterns.
Using these statistics, he found that 64 percent of Orange County residents have thought about buying a home in the first quarter of 2015—because they were in a financial position to do so.
This is a much greater percentage of people who can afford a home than the statistics put out by the California Association of Realtors would have you assume; the CAR says that only 22 percent of Orange County households can afford a median-priced home.
What does this mean? It means that not only is Orange County’s housing market hot—but it is also healthy, as it is backed up by a very strong job market: “Yes, today’s home prices are nearing the old pre-recession peak, and by many metrics, local housing is costly to typical families. That may scare off numerous house shoppers. But mortgages remain cheap and unemployment started the year averaging 4.7 percent—the best since the first quarter of 2008,” Lansner writes.
As always, if you’d like to discuss this or any other real estate trends, please feel free to give me a call at (714) 348-4000. Happy house hunting!