Thursday, July 5, 2007

Orange County + Home Affordability = Oxymoron


ox·y·mo·ron (ks-môrn, -mr-)n. pl. ox·y·mo·ra (-môr, -mr) or ox·y·mo·rons - A rhetorical figure in which incongruous or contradictory terms are combined, as in a "deafening silence" and "a mournful optimist".


Local realtors like to spout off about how "It's a great time to buy now" as well as the OC classic after looking you up and down: "But, darling, everyone wants to live here!" But what these country club realtors and Boiler Room mortgage lenders conveniently forget to mention is that few can truly afford to do so. The median family income in Orange County is now $75,700 gross. Local median home prices are 10 times that.


Any city in Orange County is now considered No. 3 in the Top 10 of least affordable American cities.


So what to do? You have to have a piece of the American dream! You're entitled! You work hard. You pay your taxes! But what if you're Mr. Average Joe in Lake Forest, pulling down $75,700 salary per annum. No commissions or bonuses. How can you get in on the local $750,000 3 bedroom, 2 bath single family?


The truth is you can't. You simply can't afford it. After carefully evaluating your personal budget: cash flows coming in and expenditures going out, including auto loans, education loans, planned expenditures, household expenditures, and any credit card debts, reality starts to sink in. At $75,700 it's time to either lower expectations, rob a bank or move away.


Even if you lived your OC life like a Spartan, shunning those weekend fashion shopping sprees with friends at the Irvine Spectrum, with only $75,700 per annum you cannot afford to buy a single family home in Orange County. Many OC mortgage lenders, after first laughing their asses off to your face, would then try to regain their composure and politely recommend more humble accomodations, such as a 2 door, 2 bedroom flat or condominium.


Got kids? Better get the bunk beds. IKEA has them for $199.99.


2 comments:

Morgan said...

This is so true Markus which is why so many foreclosures are hitting those people who took out fat cash-out refinance loans and levereged the hell out of their property. If you bought in Lake Forest before the bubble you could afford a nice $300,000 home on $75K. You cannot afford a $550,000 mortgage on that same property just because the property value increased and you decided you needed a new pool, car, vacation and nose job.

oc_fliptrack said...

Yep, it stinks. My standard of living is virtually unchanged over the last eight years even though my income rose by some 35%. Chalk it up to the cost of living here.

Everybody wants to, right?