Is Irvine one of the most affordable cities in So-Cal???

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bigmoneysalsa_IHB

bigmoneysalsa_IHB

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Percentage of MLS asking prices (condo and sfr only) at or below 5 times 2005 median city household income.


Collected 02/03/07 from ziprealty.com and factfinder.census.gov.





Irvine - 4.6%


Temecula - 3.1%


Newport Beach - 2.5%


Ontario - 2.1%


Moreno Valley - 2.0%


Santa Ana - 1.7%


Riverside - 1.6%


San Bernardino - 0.4%


Costa Mesa - 0.0%


Laguna Beach - 0.0%





This kind of suprised me. While I fully expected Laguna to be at the bottom, I was really suprised that Irvine and Newport Beach were at the top. Also, it seems clear that real affordability for average families in the IE is largely a myth. San Bernadino in particular was almost as bad as the beach cities in terms of incomes being detached from prices.




Any guesses as to why Irvine and NB are so relatively high? I suppose it's mostly the high amount of one and two bedroom condos, whereas IE cities have very few condos and mostly SFRs?

<p> </p>
 
<p><em>"Your honor, I present Exhibit A in why housing can't maintain today's prices forever."</em> </p>

<p>Yeah, the old rule of thumb used to be 3X. Interesting compilation statistic.</p>

<p>SCHB</p>
 
<p>Median incomes (from wikipedia):</p>

<p>Irvine: 85k$</p>

<p>Temecula: 75k$</p>

<p>Newport Beach: 85$k</p>

<p>...</p>

<p>Santa Ana: 43k$</p>

<p>Riverside: 42k$</p>

<p>Costa Mesa: 50k$</p>

<p>Laguna Beach: 75k$</p>

<p>With the exception of Laguna beach, which may be a special case, I'd say the higher incomes keep the affordability ratios afloat in places like Irvine.</p>

<p>Or, put another way, less fortunate folks seem to be more willing to overleverage themselves to become homeowners... and will probably remain less fortunate in the process.</p>

<p>Another theory would be prices on the outlying cities are out of reach for immigrants and these settle in the inner cities, pushing the prices up for the people already there.</p>
 
In booming area like Irvine, I think many new comers have significantly higher income and equity so median income-to-price might no longer be the the normal ratio. So in newer communities like Quail Hill the income should have somewhat higher than some other zipcode. I dont think this is necessarily a sign of bubble about to burst.
 
<p>I wasn't really trying to argue for or against a bubble per se. I guess what I am curious about is where Irvine is headed as a housing market.</p>

<p>There are some cities (Laguna Beach, Santa Monica, Honalulu) where everyone acknowleges that home prices have probably become permanently detached from incomes no matter what the state of the market. These cities are "special" in the sense that income-earners are not the ones driving the market - instead the market is dominated by old money (people who bought decades ago) and imported wealth.</p>

<p>So the question is: is Irvine on the path to becoming one of these "special" cities, where regular (say less than 2X median) income-earners who have not bought in already will really never have much chance? Or will it remain a normal city, where prices are still quite higher than average but only to the extent that our income levels are also higher than average?</p>

<p>Anectdotally, it seems like the opportunities for people of below average income in Irvine to "get their foot in the door" by buying something modest is actually better here in Irvine than in many other places for the time being. So hopefully (at least for working stiffs like me) the second case is true.</p>
 
<p>I would say for a city to become "special" it needs to detach itself from economy/business as its main source of new money through a regular inflow of rich retirees that don't depend on jobs. Irvine looks very much to me like a business-driven city and so I don't see it becoming "special" in the short to mid-term. If the percentage of people in Irvine who don't actually need to work grows past a certain point, then I believe Irvine could attain "special" status.</p>
 
I'm actually a bit shocked that Costa Mesa's median income is only $50k. My impression of the city has always been "richer", prolly because of South Coast Plaza. Guess I was wrong on that one.





Something that had been bugging me in the back of my mind is, if Camp Pendleton is ever developed into housing tracts decades into the future, will that cause a $/demographic flight away from Irvine? There's a general trend where people leave older communities (Long Beach, Anaheim) and migrate toward newer ones (Camarillo, Diamond Bar, Irvine) with new homes. Irvine has been very attractive because most of its homes are nice and new. What happens when they're old?












 
<p>Also keep in mind the figures I gave are HOUSEHOLD incomes. Individual incomes are much lower. Most of the income figures on wikipedia are based on the 2000 Census, so you can probably add 10-15% to account for inflation since then. But it gives a good idea of a general ballpark figure anyway.</p>

<p>Another source (CNN money) gives the 2006 household income for Costa Mesa as 55k$. If you take FAMILY income, you get 64k$. The number is higher because this stat will only include married couples/related people living together.</p>
 
<p><em>"There are some cities (Laguna Beach, Santa Monica, Honalulu) where everyone acknowleges that home prices have probably become permanently detached from incomes no matter what the state of the market. These cities are "special" in the sense that income-earners are not the ones driving the market - instead the market is dominated by old money (people who bought decades ago) and imported wealth."</em></p>

<p>This is the exact situation of Newport Beach. It's been this way for the past 20 years. </p>
 
<p>Not really, look at the demographics of who buys in Irvine. Usually DINKS, I know my wife and I are. What somewhat distrubs me is that people are SO resistant to lowering their price. They will even ride the shinking ship down before just stepping up and taking the a moderate loss sooner than a "maximized" loss later.</p>

<p>-bix</p>
 
<p><em>Not really, look at the demographics of who buys in Irvine. Usually DINKS, I know my wife and I are.</em> </p>

<p>I find it hard to believe that DINK's are the driving force behind Irvine real estate. </p>

<p>Where are you getting your information? Can you supply a link? </p>
 
<p>I've just asked around at more RE companies, most loan companies (friend owns a mortgage business) and a few of the rental places I looked around at. So no, its not really a stastic more of an observation.</p>

<p> </p>

<p>-bix</p>
 
<p>Please take this "expectations" survey... Results will be posted to the forum soon!</p>

<p><a href="http://www.zoomerang.com/survey.zgi?p=WEB2265RPA6SQQ">http://www.zoomerang.com/survey.zgi?p=WEB2265RPA6SQQ</a> </p>

<p>Just three basic questions to gauge what people are expecting to do if ready to purchase a house now....</p>

<p>Thanks,</p>

<p>crucialtaunt</p>
 
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