Poll

What do you think the average *real* income in Irvine is?

Less than $100k
9 (15%)
$100k
17 (28.3%)
$200k
28 (46.7%)
$300k
2 (3.3%)
More than $300k
4 (6.7%)

Total Members Voted: 60

Author Topic: Average Income in Irvine  (Read 87245 times)

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Offline irvinehomeowner

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Average Income in Irvine
« on: December 12, 2011, 09:06:12 AM »
KPop time!

Back during the bubble, one of the arguments about Irvine housing prices was that the price to income ratio was too high.

People like AZDave, quoting Wikipedia, contended that the average income in Irvine was $100k and that the median pricing was way too high.

I think the average income in Irvine is higher than that. I know single income families pulling in more than $100k and dual income families making significantly more than that. High incomes has to be part of the reason why Irvine prices are still higher than surrounding areas.

This also goes for Tustin Ranch, Newport and some South County cities.

How can you get a valid average when there are residents with cash businesses, foreign income and various variables (like retired people and students) that skew true earnings. That's the problem with "reported" income and census data... it doesn't give you an accurate picture.

So where do you think the *real* average is?
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Offline IndieDev

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Re: Average Income in Irvine
« Reply #1 on: December 12, 2011, 09:39:50 AM »
As a measure, median income already "smooths" out statistical outliers. Irvine is a large enough city (over 200,000) that the median income measure should be fairly accurate.

Now I don't know the exact number of people with cash businesses who fraudulently under report their income, but if that's what it takes to buy a home in Irvine, then I'm not sure why it's even being discussed.
"You are just a whining loser here hoping that Irvine house price can be 50% off so that you can afford a house here." - NonFCB
"690k... 20% down 4.25 int rate .36 dti and you need a salary of $ 90,500" - VillagePeople
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Offline USCTrojanCPA

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Re: Average Income in Irvine
« Reply #2 on: December 12, 2011, 09:44:33 AM »
It's not as simple as what the incomes are.  Are we talking about per capita earners from 25 to 55 or are we talking about household income?  It's also important to consider what the funds that buyers have available for downpayments that buyers have.  I'm sure there are a lot of dual income households in Irvine making $150k-$300k per year.  But I've had buyers who made less than $100k in household income (single earners) but had very high savings ($500k to $1m). 
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Offline freedomcm

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Re: Average Income in Irvine
« Reply #3 on: December 12, 2011, 10:30:54 AM »
And conversely, we've all seen the many households in Irvine and surrounding areas who were completely faking it by pulling money out of their houses.

How many were $75k ea dual income families who were also pulling $75k from the house?

How many were mortgage brokers, realitters, and car salesmen on commissions taking home half or less of their peak earnings?


Offline irvinehomeowner

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Re: Average Income in Irvine
« Reply #4 on: December 12, 2011, 10:44:59 AM »
But I guess that's also what skews the "average". Since Irvine has a huge rental market, a large student population and a significant number of retired people, the reported average (or median) isn't what should be compared to prices.

What we should be looking at is the average income of people buying homes in Irvine... but that type of statistic can only be pulled from purchases where buyer income is used to qualify for homes.

Either way, I don't think median or average income is a reliable method to determine affordability. This isn't to say homes are not overpriced in Irvine (they are), but I'm not sure how accurately it reflects that. I'm sure there are areas where the average price/income ratio is much higher than Irvine.

I'm thinking that in the "homebuying" segment of Irvine's population, we're probably looking at over $200k if not higher.
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Offline USCTrojanCPA

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Re: Average Income in Irvine
« Reply #5 on: December 12, 2011, 11:05:44 AM »
But I guess that's also what skews the "average". Since Irvine has a huge rental market, a large student population and a significant number of retired people, the reported average (or median) isn't what should be compared to prices.

What we should be looking at is the average income of people buying homes in Irvine... but that type of statistic can only be pulled from purchases where buyer income is used to qualify for homes.

Either way, I don't think median or average income is a reliable method to determine affordability. This isn't to say homes are not overpriced in Irvine (they are), but I'm not sure how accurately it reflects that. I'm sure there are areas where the average price/income ratio is much higher than Irvine.

I'm thinking that in the "homebuying" segment of Irvine's population, we're probably looking at over $200k if not higher.
You'd have to further break that down by the type of buyer.  Obviously younger buyer who's looking for a 2/3 bedroom condo in the $300k-$400k will be much lower than a dual income family looking for a 2,000sf SFR. 
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Offline irvinehomeshopper

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Re: Average Income in Irvine
« Reply #6 on: December 12, 2011, 11:33:40 AM »
The average income in Irvine is not a gauge for setting home prices. The price gauge is validated by knife catchers who ultimately fall for the WTF pricing. They are out of towners who are not familiar with price scale or some 85 Degree Celsius cults.

Who cares about the low income or average income earners. They are at the bottom of the totem pole and IAC will take care of them and keep them as renters for life.

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Offline IndieDev

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Re: Average Income in Irvine
« Reply #7 on: December 12, 2011, 11:36:25 AM »
Irvine apartments are nice. I remember my apartment in college. I had to work 20 hours a week just to keep the roof of this roach shack over my head. Not even a stove, just a hot plate.

IAC puts in huge swimming pools, gyms, underground parking facilities, they throw TIC parties every once in a while (some I've attended). I think Irvine renters are living large.
"You are just a whining loser here hoping that Irvine house price can be 50% off so that you can afford a house here." - NonFCB
"690k... 20% down 4.25 int rate .36 dti and you need a salary of $ 90,500" - VillagePeople
"People are paying for something else, and labeling it "good schools". - PatStar

Offline USCTrojanCPA

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Re: Average Income in Irvine
« Reply #8 on: December 12, 2011, 11:49:38 AM »
Irvine apartments are nice. I remember my apartment in college. I had to work 20 hours a week just to keep the roof of this roach shack over my head. Not even a stove, just a hot plate.

IAC puts in huge swimming pools, gyms, underground parking facilities, they throw TIC parties every once in a while (some I've attended). I think Irvine renters are living large.
As a current IAC renter, I would agree that the apartments are pretty nice when compared to other apartments (especially when you have a washer/dryer inside your unit and a garage for your car).  But they come at a price, a high rent.  I'm sure I could pay 10-20% less in rent for a comparable apartment complex in one of Irvine's surrounding areas. 
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Offline Liar Loan

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Re: Average Income in Irvine
« Reply #9 on: December 12, 2011, 12:21:01 PM »
My guess is homes in Irvine are overpriced due to the status premium that some are willing to pay.  Don't get hung up on average income or median income for an area.  What you really need to see is the distribution of incomes to know whether a large enough cohort exists at a certain income level to afford to purchase in Irvine.  I will also venture to guess that Irvine homebuilders have performed some of this analysis and know how much they can charge to achieve a certain level of sales.

How can you get a valid average when there are residents with cash businesses, foreign income and various variables (like retired people and students) that skew true earnings. That's the problem with "reported" income and census data... it doesn't give you an accurate picture.

So where do you think the *real* average is?

The US Census builds estimates of these things into their models.  Nothing, and I mean nothing, about statistics is exact, but these measures give us reasonably close estimates of the truth.
« Last Edit: December 12, 2011, 12:23:58 PM by Liar Loan »

Offline akim997

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Re: Average Income in Irvine
« Reply #10 on: December 12, 2011, 06:51:22 PM »
Where I work, we use such measures as relative barometers.   Not something you want to make decisions on, or use as a citation for a very specific argument.  Median income in Irvine vs. median income in surrounding areas can tell you things.   Median local income vs. county/state/national tells you something.    But I don't look beyond that.   I agree with Liar Loan in that I'm sure the homebuilders/developers use such statistics to set pricing based on regression models they run.   But it really means nothing to me.   

There are other dynamics that can affect pricing/ demand in Irvine.   Now, if you started taking some measure of cash flow that a family generates, that would tell you something.    Anyways, why do we have to guess and does it really matter?    We can figure what we think makes sense.   Let's take an $850,000 house in Irvine for example.   Assuming you put 20% down, you end up with a $680K mortgage that's going to cost you somewhere around $3500 per month.   Also assume:
HOA: $200/mo
Property Tx + Mello:  $1150/mo
HOI:  $150/mo
You are basically on the hook for $5K per month.   Let's say in addition to these expenses, you spend another $2,500 on everything else.  So after taxes, you need to have 7500 per month.    Assuming your blended all-in tax rate is 30% because of tax subsidies, you need to make about $128K per year (this also varies depending if you are married or not).    You need to make more based on if you have other expenses - day care, student loans, car loans, saving for the future, etc.   What we do know is different people act differently.   If you have two working spouses, are they both maxing out their 401(k) or are they dismissing all savings to get into the large house now?  You just don't know.   Everyone has their own definition of what is right.   I mean, I also assumed that you buy this home with 20 down which is $170,000.   Some people may get their down payment by taking a 401k loan or by other means. 

I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.   If you have two working professionals, I don't think that is an absurd amount by any means.   The media has dubbed these couples HENRYs (high earners, not rich yet).   





Offline irvinehomeshopper

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Re: Average Income in Irvine
« Reply #11 on: December 13, 2011, 11:15:18 AM »
Or live on a Ramen diet. Why do you think Marachan headquarter and production are located in Irvine?
"I can only imagine at a house warming party what a total embarrassment it would be to tell the guests that there is no tour because there is no more house to show you because you are standing in the only room in the house. "

Offline IndieDev

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Re: Average Income in Irvine
« Reply #12 on: December 13, 2011, 11:43:08 AM »
Or live on a Ramen diet. Why do you think Marachan headquarter and production are located in Irvine?

Fake it till you make it baby!
"You are just a whining loser here hoping that Irvine house price can be 50% off so that you can afford a house here." - NonFCB
"690k... 20% down 4.25 int rate .36 dti and you need a salary of $ 90,500" - VillagePeople
"People are paying for something else, and labeling it "good schools". - PatStar

Offline irvinehomeowner

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Re: Average Income in Irvine
« Reply #13 on: December 13, 2011, 11:48:20 AM »
Or live on a Ramen diet. Why do you think Marachan headquarter and production are located in Irvine?
So not HENRYs but HIREDs... high income, ramen eating diet.
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Offline qwerty

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Re: Average Income in Irvine
« Reply #14 on: December 13, 2011, 12:09:33 PM »

I think for someone to be comfortable where they could save money, pay for expenses, and comfortably afford an $850K house (w only 20% down), combined income of $250-300K would be about right.   If you have two working professionals, I don't think that is an absurd amount by any means.   The media has dubbed these couples HENRYs (high earners, not rich yet).   

the absurd part is the kind of house 850K gets you in irvine; my wife and i will likely take our talents to lake forest.

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