Los Angeles is in a rental crisis. Los Angeles is in a homebuying crisis. There isn't enough housing. There definitely isn't enough housing that's affordable for the average wage earner (let alone the poor). Incomes are much lower in LA than they are in other high-priced cities: 22 percent lower than in San Francisco and 13 percent lower than in New York, according to Zillow (median income is $59,424). But Mayor Garcetti announced a proposal this week to raise LA's minimum wage to $13.25 an hour over the next three years (the minimum wage in California today is $9); the measure would raise wages for nearly 40 percent of LA's workers. But those workers still wouldn't be able to afford to actually live in Los Angeles.
Low incomes and high housing prices mean LA has the most residents (nearly half) paying untenable amounts of their income (more than the recommended 30 percent) toward housing. The average LA rent is now 48 percent of the average LA income and the average house costs 43 percent of the median income. That's tied with San Francisco for highest in the nation. LA also has the lowest homeownership rate and the highest renter rate of anywhere in the US, according to Bloomberg.
Conveniently, the LA Times has just released a helpful mapping tool incorporating data on income and housing costs in every LA zip code; you enter your household income, the percent of that income you want to put toward housing, and the size of your down payment and the map tells you where it's cheaper to buy (in yellow), where it's cheaper to rent (blue), and where you should just give up because it's too "difficult to afford" (red). We played around, plugging in some of these numbers we've been tossing around to see who can afford what where (and totally leaving aside that we're comparing 2017 wages with the 2014 cost of housing):
People with minimum wage jobs rarely work 40-hour weeks (assuming they only have one job), but let's say that they do and, furthermore, that they get paid vacation or take no vacation—that's a yearly salary of $27,560. For most of these maps we've used a down payment of $91,400, or 20 percent of the median housing price ($457,000). As you can see here, there is not a single place in the city of Los Angeles that is affordable on that salary. (The tool reflects median rent on two-bedroom apartments, so a single person might be ok somewhere.)
If a person making our fantasy version of the minimum wage paid 50 percent of their income toward rent, a few tiny pockets of affordability open up (mostly for renting).
There are a few areas where renting is reasonable for two people both making the fantasy minimum wage.
This map shows what's affordable for a single person earning the median income of $59,424 and paying the recommended 30 percent toward housing. Central LA is pretty much unaffordable; everywhere else it's mostly cheaper to rent.
Here's affordability for a person earning the median income but paying the 43 percent of their income that buyers actually have to devote in Los Angeles.
Bloomberg cites a recent Planning Department report that said "Most new jobs in Los Angeles through 2018 will pay less than $23,000 a year." Here's what a person paying a full half of that salary can afford in LA (nothing).
Ok, but what if you're doing pretty well, making twice the median income, or married to someone and you're both making the median income. And let's say you even have $200k for a down payment. Don't feel left out, there are still plenty of places you can't afford to buy a house.
· LA is the US's Most Unaffordable Place For Renting and Buying [Curbed LA]
· 10 Charts That Show How and Why LA Has the Most Unaffordable Rental Market in the US [Curbed LA]
· Rent or own: Where can you afford to live? [LAT]
Loading comments...