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Home affordability falling for renters, buyers

Home affordability falling for renters, buyers

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The average asking rent for Orange County complexes of 90 or more units hit $ 1,848 a month in the April-through-June period, an all-time high. FILE: THE REGISTER

Minimum income to afford a typical two-bedroom apartment in O.C.

Minimum income to afford the median-priced O.C. house.

It’s getting harder for renters and homebuyers to afford the cost of putting a roof over their heads, according to figures released this week.

Renting in Los Angeles and Orange counties is less affordable than any of the nation’s other top 35 metro areas, according to a Zillow analysis of rent affordability in the second quarter of 2015.

The typical renter in Los Angeles and Orange counties paid 48.9 percent of his or her monthly income to the landlord in the spring months of April through June, Zillow reported.

In Orange County, a renter needs to earn almost $ 66,000 a year to afford the typical two-bedroom apartment here, housing advocacy groups have reported.

For homebuyers, income requirements are significantly higher. You would have needed just over $ 141,000 a year to afford a median-priced Orange County house this past spring. That’s up from $ 92,000 in 2012.

A home is considered affordable when the monthly rent or mortgage payment equals 30 percent or less of gross monthly pay.

Zillow estimated that the mortgage for a median-priced home in Los Angeles and Orange counties ate up about 39.9 percent of monthly pay – the third-highest percentage among the top 35 U.S. metro areas.

A separate report out this week, by the California Association of Realtors, found that just 21 percent of Orange County households could afford the $ 713,000 needed to buy a median-priced house during the spring quarter.

That’s roughly half the proportion of households that could afford the median-priced house when affordability peaked at 39 percent in the winter of 2012.

Rising prices and galloping rent hikes are to blame. Home prices have increased steadily for the past three years, while rents have been on the rise for 41/2 years, statistics from a variety of sources show.

The increase in housing costs, spurred by a shortage of at least 60,000 homes, is a major contributor to an “opportunity gap” emerging in Orange County, according to the annual Orange County Community Indicators report released this month.

Between 2006 and 2014, builders supplied only 40 percent of the new housing needed for all income levels, and only 10 percent of needed low-income units, the report said.

Housing costs here are estimated at 142 percent above the national average, resulting in a dramatic rise in the number of families who are doubling and tripling up in apartments, and a spike in homeless and poorly housed children.

Fitch Ratings provided another indicator showing that Orange County housing is out of reach for many people: Homes here were 9.7 percent overvalued in the second quarter, according to Fitch’s Sustainable Home Price model.

That may seem steep compared with the overall national overvaluation of 1.4 percent, but it’s less than California’s 11 percent overvaluation.

Statewide, the affordability measure – which combines housing, mortgage and income trends – translates this way: 30 percent of California households can comfortably buy a median-priced, existing single-family home.

The Realtors association said a potential buyer this past spring would have needed an annual income of $ 95,980 to qualify for the state’s median-priced house.

When you look at less expensive condominiums and townhomes, affordability rises to 39 percent.

Affordability for house shoppers this past spring got worse in every California market but Kings County.

Affordability was lowest in San Francisco (10 percent) and highest in Kings County (62 percent).

Contact the writer: 714-796-7734 or jcollins@ocregister.com

The Orange County Register – News Headlines : Real Estate News