LP.com

With the continuous rise in home prices in Orange County, a recent study reveals that local residents need an annual income nearing $350,000 to purchase a home. According to the California Association of Realtors, Orange County has become one of the hardest places in California to afford a home. To buy a median-priced home in Orange County, an annual income exceeding $349,000 is required, with the median home price approaching $1.4 million.

The report further highlights that only 11% of Orange County residents have an income sufficient to cover home buying expenses. Analysts assumed buyers could make a down payment of about 20%, or approximately $275,000, to derive these figures.

Nationally, the annual income required to purchase a median-priced home is around $99,000, with the price approximately $389,000. Since early 2020, U.S. home prices have surged by 47.1%, a record-breaking increase over recent decades. According to a ResiClub analysis of the Case-Shiller National Home Price Index, U.S. home prices rose by 30.1% in the 1990s and 44.7% in the 2010s.

FOX11's analysis indicates that years of underbuilding have led to a housing shortage in the U.S., exacerbated by rapidly rising mortgage rates and increased construction material costs. According to a separate report by Realtor.com, the current U.S. housing supply is astonishingly 34.3% below the pre-pandemic levels of early 2020.

The increase in mortgage rates over the past three years has also caused the so-called "golden handcuffs" effect in the housing market. Sellers who locked in historically low rates of 3% or less at the start of the pandemic are reluctant to sell, further tightening market supply and limiting options for eager homebuyers.

Internet

Economists predict that mortgage rates will remain high in 2024, only gradually decreasing when the Federal Reserve begins to cut rates. However, rates are unlikely to return to the low levels seen during the pandemic. Additionally, due to higher-than-expected inflation data at the beginning of the year, investors doubt the Fed will cut rates this year.

Several factors contribute to the continuous rise in Orange County home prices. First, as an economically prosperous area with beautiful environments, Orange County has long been a popular choice for homebuyers and investors. The area offers not only beautiful beaches and warm climates but also excellent educational resources and quality community facilities. Second, Orange County's high-tech industries and business centers attract a large number of high-income individuals, whose demand for high-end housing drives up prices.

Additionally, the insufficient supply of housing in Orange County is a major driver of price increases. Although there have been some new construction projects in recent years, the overall supply remains far from meeting market demand. The scarcity of land resources and strict building regulations also slow down the development of new residential projects.

For ordinary homebuyers, Orange County's high home prices bring immense economic pressure. Even middle-income families find it difficult to bear the high costs of homeownership. High home prices not only mean high down payments but also substantial monthly mortgage payments and property taxes. This forces many families to give up their homeownership dreams and opt for renting instead.

The rental market has become exceptionally hot due to high home prices. Rents continue to rise, adding to the economic burden on renters. Many families have to cut spending in other areas to afford high rents, impacting their quality of life.

To address the high home prices and tight supply, the government and relevant authorities need to take effective measures. Increasing housing supply, relaxing building regulations, and providing home purchase subsidies are possible policy directions. Additionally, financial institutions can offer more flexible loan products to help homebuyers lower the barriers to homeownership.

While Orange County's home prices may not significantly drop in the short term, the rate of price growth could slow down with policy adjustments and market stabilization. For homebuyers, planning finances wisely, choosing the right time to buy, and fully utilizing policy support remain crucial strategies for achieving homeownership dreams.