"There was a period in the 1980s, from about 1984 to 1987, when (housing) appreciation was so rapid you could never save enough for a down payment," Bruchmann recalled. Initially, he said, he, his wife and two daughters had to make lots of financial sacrifices, including cutting back on entertainment, clothing and automobile expenses.
Yet as high as home values ratcheted up during the 1980s, it was renters--not homeowners--who faced the toughest challenge making financial ends meet.
Even with rent control laws in many cities, a higher percentage of renters spent 25% of their income on housing than homeowners, the Census Bureau reported.
The percentage of California renters spending 25% or more of their income on rent rose to 58.1% in 1990 from 51.2% in 1980. By contrast, just 40.5% of California homeowners spent at least 25% of their income on housing costs in 1990.
"Renters are paying proportionately more for housing, especially at lower income levels--and that doesn't even take into account special tax breaks which make (actual) home-owner expenditures even lower" than renters', said Dowell Myers, an associate professor at USC who is the author of the recent book "Analysis with Local Census Data: Portraits of Change."
However, the percentage of homeowners spending at least 25% of their income on housing grew faster than the percentage of renters. In Los Angeles, the percentage of homeowners spending 25% or more of their income on housing costs jumped more than 13 percentage points to 40.6% in 1990. The percentage of renters spending 25% or more of their income on rent during the same period rose 8.2 percentage points to 59%.
Residents of some areas with high housing costs had an easier time making ends meet than in others because they had deeper pockets.
For instance, although Los Angeles County's median home value was just 7.7% lower than in Ventura County and 10.3% below Orange County, the $34,965 median household income in Los Angeles County was more than 20% lower than the $45,922 median income in Orange County and the $45,612 median income in Ventura County. In other words, although housing costs in the three counties varied only slightly, Los Angeles County households generally had far less income for housing than their neighbors in Orange and Ventura counties.
The breathtaking rise in California housing costs and the sluggish growth in household incomes has left the state with the lowest rate of homeownership in the nation and caused some demographers and housing experts to wonder "how come--when there was plenty of money from lenders--we didn't build enough housing," said Pugash of Hearthstone Advisors in San Francisco.
In part, the answer lies in restrictions on housing construction imposed by many California communities as residents became increasingly vocal about preserving the environment and limiting growth during the 1980s. Construction slowed further toward the end of the decade when banks and thrifts--under pressure from federal regulators--began to restrict credit granted to real estate developers in order to shore up the nation's ailing financial system. Even if a sufficient number of housing units had been built during the 1980s, the average household size in California may still have increased because of cultural and demographic trends in the 1980s, experts say.
David M. Heer, associate director of the Population Research Laboratory at USC, said the huge influx of Latino and Asian immigrants in the 1980s contributed to the increase in household size in California. That's because extended families living in the same household are more common among the two ethnic groups than among other U.S. families.
California Housing Costs 1. Median Home Cost 1980: $84,745 1990: $195,500 2. Mortgage Payments 1980: $411 1990: $1,077 3. Percent Spending 25%-Plus on Housing 1980: 28.4% 1990: 40.5% 4. Median Rent 1980: $283 1990: $620 5. Percent Spending 25%-Plus on Rent 1980: 51.2% 1990: 58.1% 6. Household Size 1980: 2.68 1990: 2.79 Key: 1. Median market value of owner-occupied housing units 2. Mortgage payment includes real estate taxes, insurance, utilities and monthly condominium and mobile home fees. 3. Percent of homeowners who spend 25% or more of their income on housing costs. 4. Median gross rent 5. Percent of renters who spend 25% or more of their income on rent 6. Average number of occupants per housing unit SOURCE: Census Bureau
Southland Housing Costs Below are Census Bureau figures on how personal income and housing costs changed in each of the six Southland counties between 1980 and 1990.
Percent Los Angeles County 1990 1980 change Median household income $34,965 $17,551 +99 Median home cost $226,400 $88,019 +157 Mortgage payment* $1,137 $401 +184 Owners spending 25%-plus on housing 40.6% 27.4% +48 Median rent $626 $277 +126 Renters spending 25%-plus on rent 59.0% 50.8% +16 Household size 2.91 2.69 +8