Mortgage Increases Are Nearly Equal in Poor, Rich Areas

The number of loans used to purchase homes in the Southland’s poorest neighborhoods grew at roughly the same rate as in the wealthy ones through the first nine months of this year, according to a study released Wednesday.

The findings contrast sharply from a year ago, when the housing recovery was more pronounced in wealthier areas.

Overall, mortgages used to purchase homes in the top 10% income areas grew by 27%, about the same rate recorded for the bottom 10%, according to First American Real Estate Solutions, an Anaheim real estate research firm.

In the midst of record mortgage lending in California, home loans among the top 10% households in Orange County grew 39.4%, while loan volume in the poorest neighborhoods expanded 34.7%.

In Los Angeles County, loans approved to those living in the lowest-income neighborhoods grew 21.9%, compared with a 23% gain in the most affluent areas.

“This trend is a clear indication that California’s housing recovery has now spread to lower income areas,” said Nima Nattagh, First American’s research director.

Among the state’s most populous counties, San Bernardino showed the most progress, where loan growth in less-affluent areas surpassed the richest ones by a wide margin, 52.9% to 18.6%.

The discrepancy between rich and poor was greatest in San Diego County, where mortgage loans in the most prosperous neighborhoods rose 41%, compared with only 20% in poor areas.

Despite the gains, the survey also pointed out that there remains significant disparity in homeowners’ ability to obtain refinance or home-equity loans.

Demand for refinance and equity loans has grown by unprecedented amounts this year, rising 85% from the first nine months of 1997, the study said. But such loans soared by 105% in the high-income neighborhoods compared with less than 50% in low-income neighborhoods.

The clearest disparity was found in Los Angeles, where such loans grew by 110.2% in the richest areas, compared with only 23.7% in the poorest areas. In Orange County, the number of such loans grew 138.5% in wealthy neighborhoods, compared with 112.5% in the lowest-income neighborhoods.

The biggest reasons for the discrepancy, Nattagh said, is that homes in poorer neighborhoods appreciated at a far lower rate than houses in upper-crust areas. The First American study was based on an analysis of public records, covering 3,390 neighborhoods in California.

In all, the study found that 925,714 loans were made for purchase, refinancing and home-equity loans.

Overall, the number of mortgages used for home purchases jumped 26%, to 306,000.

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Loan Lines

Mortgage loans to low-income households in Orange County are increasing at a faster rate than to those with high incomes. During the first nine months of 1998, households in the bottom 10% increased nearly 40% while activity among the richest 10% grew around 35%. Here’s how the county increase compares to the rest of Southern California:

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Top Bottom County 10% 10% Los Angeles 21.9% 23.0% Orange 34.7% 39.4% Riverside 26.6% 22.9% San Bernardino 18.6% 52.9% San Diego 41.0% 19.7% Ventura 34.9% 34.2%

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Source: First American Real Estate Solutions