A family with two median incomes—theoretically middle-class—can only afford about 12 percent of homes on the market in Los Angeles, according to a new study by listing site Redfin. Using stats from the Bureau of Labor Statistics, the study shows that if there's only one member of the household bringing home the checks, that household's home options are reduced to about one percent of houses on the market. (Unlike housing prices, incomes adjusted for inflation haven't increased much, if at all, in decades.) If we expand that housing search to include the entire LA metro (pulling in areas outside of Los Angeles proper, like Castaic, El Monte, Santa Ana), about 40 percent of homes are affordable for the typical homebuyer, according to a new report by Zillow.
("Affordability" in the Zillow survey means that homeowners could spend 35 percent of their income, the long-standing average for LA, and swing a house payment.) "If the rate on a 30-year fixed mortgage keeps rising to 5% by next year, the typical Los Angeles family will need to spend nearly 47% of its income to make payments," warns the LA Times (it is already cheaper in LA to rent than to buy).
With homes inching further and further out of reach, "[h]ome buyers are putting less money down, relying on "non-traditional" financing and moving further out in order to find a house they can afford," a Zillow economist says, adding that "we're already beginning to see more of the kinds of worrisome trends we saw en masse during the years leading up to the housing crash." What could possibly go wrong?
· Two Middle-Class Incomes Don't Add Up To a Home [Redfin]
· In Search of Affordability [Zillow]
· Nearly a Fifth of LA Homes For Sale Are More Than $1 Million [Curbed LA]