San Diego Housing Bubble News and Analysis

I work in a Engineering/Manufacturing facility in Orange County with 155 people and my estimate is that about 15 people make more than $100K. Most of these people are Managers, very Senior Engineers and Controller. So, about 10% of the people make more than $100K. However, this is a Engineering and Manufacturing facility where wages tend to be higher than average.

Check the Irvine Housing Blog post that Irvine Renter did about a month or so ago on this subject. It was very detailed.

kev374 queried, "[H]as it become so common that almost everyone here in Orange County is earning at the six figure mark?" Maybe almost everyone he knows makes that much but it is hard for me to imagine all the barristas, store clerks, surfing instructors, teachers, etc coming from elsewhere in the state just to work in OC. The US Census bureau states that median "household" income for the county in 2004 was 58K (and change) and that the average household has 3 persons.

http://quickfacts.census.gov/qfd/states/...

Beatus ille qui procul negotiis ... paterna rura bobus exercet suis, solutus omni fenore..... Horace

And no, the median HHI was not well above the 100K mark.

I think people in Southern California, in general, make more money than the tax and census rolls suggest but less money than their lifestyles would suggest, if that makes any sense.

For reasons that I won't go into I see a fair number of individual financial statements of people here in Southern California. There's a large subset of real estate entrepreneurs that have huge cash flow but little or no reported income due to allowable depreciation. An extreme example: I saw financial statements for a developer of apartments that showed a net worth of almost $300 million (on assets of about $660 million), cash flow of almost $12 million/year but the guy hadn't paid taxes in over 20 years; in fact, he reported losses due to huge depreciation and the fact that he keeps developing new projects (all over the U.S. - not just here in SoCal) to keep the depreciation train running.

In addition there are a lot of non-real estate entrepreneurs that run a lot of "otherwise personal" expenses through their businesses, thus reporting lower income for tax purposes than is really the case.

So part of the disconnect between household income and housing prices is due to the much higher rate of entrepreneurial activity in SoCal versus the U.S. in general. But the other part of the disconnect is that Californians tend to spend above their means to a greater degree than the rest of the U.S.

so what do you categorize as low, median and high income in Orange County? Not in terms of stats but in terms of your own personal experience with the people you've dealt with.

In terms of Real Estate I know a $100k/yr income will not buy you even the cheapest SFR at a 30yr fixed using a 10% down, conventional debt/income ratios and the current interest rate for jumbos.

In a dual income family even if each makes 60K. The household income easily touches 120K

In a dual income family even if each makes 60K. The household income easily touches 120K
Yes, of course. 2+2 =4.

Kev was talking about *individual" income. I think most dual incomes families are above $100K.

kev374, I'm not sure how to answer your question. All I really know is the people I know, and they may not be representative of the aggregates.

Nevertheless, I think what you're getting at is that the median household income (I know you initially mentioned "individual" incomes, but I'm going to focus on household income here) should be able to afford the median price of a home in the area in question. I'm not sure if this applies well to coastal Southern Calfifornia because in most years (although not in every year) and over the long term, net in-migration has been substantial and demand for housing has historically exceeded supply. So there are a lot of people who bought in a ways back - let's say pre-2000 - who are in at either bargain or, at worst, reasonable prices relative to their incomes. Although many of these people couldn't re-purchase their homes today at current market values given their incomes.

Having said all that, I think there should be a RELATIVELY steady RELATIONSHIP between median household income and median home prices, although it wouldn't surprise me if this ratio creeps up a bit over time in SoCal for reasons that I won't go into here. Clearly we're WAY off into uncharted territory where this relationship is concerned, although we've begun to creep back in the proper direction toward equilibrium. I'm sure that Rich has all of these stats somewhere.

I don't think I answered your question but maybe I touched on the issue you were getting at.

well, I've heard time and again how there are so many Asian entrepreneurs lapping up all these houses with cash payments... :D