Affordability of Homes Beats ’91 Level Despite Rise in Rates : Housing: Although O.C. owners carry biggest mortgages in the Southland, higher incomes tend to offset the burden.

COSTA MESA —  Even with a recent rise in mortgage interest rates, housing in California is more affordable now than three years ago, according to a study released Tuesday.

And Orange County homeowners have the biggest mortgages in Southern California, TRW Redi Property Data reported.

“If you look at Orange County, you will see that the average size of a mortgage is higher,” said Nima Nattagh, an analyst with the Riverside-based real estate data company. “But if you take into account the income levels, it becomes more affordable.”

Excluding tax deductions, a typical California homeowner now spends 43.9% of his or her annual income on mortgage payments. That compares to 46.5% in 1991. The average mortgage is $157,681 now, compared to $155,784 three years ago.

“Although home mortgage rates are increasing, they are still at lower levels than three years ago,” Nattagh said. “That’s helped affordability.”

Another factor is that, though home prices have fallen during the real estate downturn, income levels are now rising, said Nattagh, whose company tracked housing affordability in 47 California counties.

Housing affordability is usually measured by the number of people in an area who can afford the median-priced home. The new TRW study, however, lists how much of a region’s average income is needed to make house payments, Nattagh said.

Orange County ranked 36th among the 47 regions surveyed, with the average homeowner spending 41% of his or her annual income on house payments. That was down from 48.7% three years ago. The size of the average mortgage, however, increased to $187,060 from $184,311--the largest in Southern California.

Los Angeles County is one of the state’s least affordable regions for home ownership--No. 43 among the 47 counties surveyed. The typical buyer there can expect to spend 43.2% of his or her annual income on a mortgage now, compared to 53.1% in 1991. That change, however, was the biggest of any area surveyed. The average mortgage in Los Angeles fell slightly to $172,249, compared to $175,886 three years ago.

Ventura County ranked No. 41 in the new study, and San Diego County was No. 42. In both areas, homeowners can expect to spend 42.4% of their incomes on mortgage payments.

Home ownership in the Inland Empire is much more affordable, TRW found, with San Bernardino County ranked No. 11 and Riverside County, No. 20.

As in previous studies, the latest TRW report listed San Francisco as the most expensive place in the state to buy a home, with buyers there setting aside 54.1% of their income for a mortgage. Still, that was a significant improvement from three years ago, when San Francisco buyers were spending 63% of their annual income on mortgage payments, the study found.

If interest rates continue to rise, Nattagh said, California’s housing affordability could quickly return to levels of three years ago, when the average statewide rate for a 30-year, fixed-rate mortgage was 9.25%. The figure now stands at 7.98%.

Housing Affordability Index

Homes are more affordable in California now than three years ago as income has increased slightly and interest rates have fallen from 1991 levels.

Average Average Mortgage payment Mortgage income mortgage as % of income rate 1991 $33,062 $155,784 46.5% 9.25% 1992 34,351 156,334 44.9 8.40 1993 34,832 156,111 44.2 7.33 1994* 35,459 157,681 43.9 7.98

HOW ORANGE COUNTY COMPARES

Orange County ranks 36th among 47 California counties in terms of mortgage payment as a percentage of income. How counties in the Southland rank:

Average Mortgage payment mortgage as a % of income Rank County 1991 1994* 1991 1994* 11 San Bernardino $119,900 $114,704 40.3% 32.0% 20 Riverside 124,482 118,953 42.6 33.8 36 Orange 184,311 187,060 48.7 41.0 41 Ventura 178,106 175,375 51.8 42.4 42 San Diego 151,840 160,574 48.3 42.4 43 Los Angeles 175,886 172,249 53.1 43.2

* January through June

Note: Incomes are based on data from the California Franchise Tax Board and Department of Finance. Mortgage rates represent average annual rates on a 30-year, fixed-rate mortgage. Average mortgage size is based on data compiled from county recorder offices.

Source: TRW Redi Property Data; Researched by JANICE L. JONES / Los Angeles Times