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HomeNewsCity NewsOrange County Median House Prices Rises Above $1 Million Amid Housing Crisis

Orange County Median House Prices Rises Above $1 Million Amid Housing Crisis

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As of April 2022, the median price of all house types upon purchase rose above $1 million in OC. It represents the county’s 15th record high since the beginning of the COVID-19 pandemic just two years ago. The county now has 45 out of 83 zip codes with a median price of $1 million compared to just 21 zip codes just one year ago. 

Concerns over the housing bubble have been a result of increased demands for homes sparked by the Federal Reserve’s economic stimulus at the beginning of the pandemic. Coupled with a shortage of housing that failed to accommodate these demands, prices have only continued to skyrocket. Mortgage rates have also seen a surge with a 30-year-fixed loan rate sitting at 5.37%, the highest since 2009; a consequence of the Federal Reserve’s raising of interest rates to abate current inflation numbers.  

OC’s cost of housing has only exacerbated the ongoing housing shortage and affordability crisis across the county. Only about 1,100 homes were up for sale as of mid-January. Last January, the number saw 2,600 listings. In 2019, there were over 5000 though demand continues to be high.

With many struggling to purchase their first home and lower-income residents struggling to pay rent, the state of California has looked to the city governments to initiate more ambitious housing construction projects. 

California, under the Sixth Cycle Regional Housing Needs Assessment (RHNA) plan, mandates OC cities to build over 180,000 new homes across the county. Every eight years, each city needs to devise its own plans to accommodate the state’s anticipated housing demands. 

In 2018, the county adopted the Housing Funding Strategy that set a goal for the development of 2,637 affordable housing units by 2025. Local developers are funded by the county government to construct these projects. Only 684 units have been completed as of January 2022. 

The mandate has led over 40 cities including Fullerton, Yorba Linda, Orange and Newport Beach to pass resolutions that called for tighter local control over zoning and housing issues. They view that the state thrust unrealistic housing demands on its local governments. 

“Sacramento is passing laws in the dozens that are stripping cities from their local governance role,” Newport Beach Councilwoman Diane Dixon said in an interview with the Voice of OC. “We know best how to preserve and protect our neighborhoods, and build the necessary housing that we need to build.”

While housing mandates are issued by the California Department of Housing and Community (HCD), the allocation process to counties and cities in Southern California is performed by the Southern California Association of Governments (SCAG), a metropolitan planning organization that serves Imperial, Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. SCAG serves as an agent to the state, organizing the competing interests of each county. 

A report by the California State Auditor explained that the State does not have a clear and cohesive plan to organize and fund housing projects. The responsibility is instead shoved to the local governments who have to figure out ways to meet demands assigned by the state. Developers are the ones constructing the houses yet, the state mandates the local government to address nongovernmental constraints such as land and construction costs. 

In opposition to SCAG’s RHNA allocations, the City of Irvine sent an appeal to reduce their mandated housing projects from 23,554 housing units by 8,259 units. They argued that SCAG presented an unrealistic number that violated several state laws. The demands were claimed to have been based on unrealistic representations of transit infrastructure, “unfair redistribution of units from other jurisdictions in OC,” were inconsistent with sustainability strategies and had a disregard for local input. Their appeal was later rejected with the adoption under the current cycle of RNHA. 

With the sheer amount of housing units being required, there are also local concerns, especially in wealthier cities. According to the RHNA, the city of Yorba Linda has been mandated to construct 2,415 new homes. 1,261 of which needs to accommodate low to very-low-income residents. Ranking as the sixth wealthiest city in the nation, dense housing projects would be viewed as disruptive to the suburban lifestyle that residents have been well accustomed to. However, with Orange County becoming more populated, racially and economically diverse, some believe that its upper-class suburbia can no longer be maintained. 

“It has a nostalgia for low-density suburban development, where everyone has their single-family home, but we don’t have that kind of space anymore,” Elizabeth Hansburg, co-founder and executive director of People for Housing Orange County, said in an interview with the LA Times. “We have to build higher-density housing in a way that really violates Orange County’s sense of self.” 

Kane Hong is a City News Intern for the spring 2022 quarter. He can be reached at kanelh@uci.edu.