By Brian Yanity
To better understand why housing is so expensive in Orange County, it helps to compare it with a California county where housing costs far less. Modoc County, in the far northeastern corner of the state, has some of the lowest housing costs in California. It is an example of an low-cost rural county with a decreasing population and and contracting economy that contradicts the perception that "all housing in California is expensive". Modoc is unfortunately typical of many rural counties across the country, but it provides a perfect example of how supply, in relation to economic demand, drives the cost of housing.
(Sources: U.S. Census Bureau, American Community Survey, 2010-2014 American Community Survey 5-Year Estimates, Table B19013; Zillow Home Value Index data through Aug. 31, 2017; Bureau of Labor Statistics).
Modoc County would be considered very affordable by California standards. As shown in the table above, a home costs more than five times more in Orange County than in Modoc, a difference which cannot be explained alone by median household income, which is only double. Things like taxes, permitting and construction costs are likely lower in Modoc County, but they are not one fifth of those Orange County Costs, and they never have been. The disparatity in home prices is caused by supply of housing with respect to demand. In the six years between 2010 and 2016, Orange County's population has increased by 5%, while that of Modoc County has decreased by 9%. There are more people who live in Orange County, or want to live here, than in Modoc County.
The end of our tale of two counties is this: Modoc County, like many rural inland counties, is in desperate need of more well-paying jobs. In contrast, Orange County, like all of coastal California, has plenty of high-paying jobs, but is in desperate need of more housing. Building that new housing is critical to enabling young people to access the jobs in Orange County.