O.C. housing more affordable than you think

O.C. housing more affordable than you think

Although Orange County’s housing is less affordable than the Inland Empire’s, the gap isn’t as great when you take transportation costs into account, a new study released Wednesday shows.

The study, by the Chicago-based Center for Neighborhood Technology, says that the “drive until you qualify” mentality doesn’t taken into account the added transportation costs of living in far-flung areas, where commutes are longer.

For example:

• Based on housing costs alone, 59% of O.C. neighborhoods are affordable. But when transportation costs are taken into account, just 48% of local neighborhoods are affordable — a 21% difference.
• In the Inland Empire counties of Riverside and San Bernardino, the gap is much bigger. There, 62% of the neighborhoods are affordable based on housing costs alone. But when transportation costs are included, just 22% are — a 40% difference.
• Nationwide, 69% of neighborhoods in 337 U.S. metro areas are considered affordable based on housing costs. This shrinks to 39% when housing and transportation costs are combined — a 30% difference.

According to the report’s authors, housing affordability in the United States is being drastically overestimated.

“There are a lot of things (to consider) besides the posted price of a house,” said Scott Bernstein, Center for Neighborhood Technology president. “It makes no sense to advertise the cost of a home without taking into account the cost of transportation.”
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Under the traditional method of calculating affordability, an area is considered affordable if the average housing costs are 30% or less of the area’s median household income. In the center’s study, an area is considered affordable if the cost of housing and transportation combined are 45% of an area’s median income.

Both Orange County and the Inland Empire have 1,800 to 1,900 census block groups, or neighborhoods measured by the U.S. Census. Both have a similar number of households — just over 930,000 in Orange County and just over a million in the Inland Empire.

But O.C.’s transportation costs are lower:

• The average commute to work is 27 minutes in Orange County, compared to 31 minutes in the Inland Empire.
• Orange County residents drive an average of just under 16,000 miles a year, while Inland Empire residents drive an average of nearly 20,000 miles per year.
• Orange County households spend an average of $3,611 on gasoline each year, compared to yearly average of $4,445 in the Inland Empire.
• In Orange County, gasoline costs consume an average of 21.3% of a household’s income, compared to 31.2% in the Inland Empire.

There is one other key difference, however. Since the median income used in the study for Orange County ($58,820 a year) is much higher than the median for the Inland Empire ($42,404 a year), an Inland Empire home must be much cheaper to be considered affordable.

In other words, housing and transportation must cost $2,206 a month or less in O.C. to be affordable. To be affordable in the Inland Empire, housing and transportation must cost $1,590 a month or less.

For more on the study, and results by metro area, visit htaindex.org.

This article was published today in the Orange County Register, written by Jeff Collins.