Oh, Magic 8-Ball, will we ever again report positive news for Los Angeles homebuyers or are we doomed to consistently break the hearts of young, potential homeowners looking to stake their claim in the City of Angels?
Outlook not so good.
In an analysis of the 100 largest metropolitan areas in the country, Bloomberg News found that LA is among the top five least affordable places to buy a home for people between the ages of ages 25 and 44. Yeesh.
By calculating the average wage in each city, and comparing it to the average yearly mortgage in that same town, Bloomberg found that six U.S. cities had a significant gap in what people made versus the minimum salary needed to pay for a single family home. In a list of the six cities where a wage gap existed, Los Angeles ranked third highest, behind Honolulu and San Jose. The average wage in Los Angeles falls $20,815 short of what’s needed to make the payments on a single family home in LA.
The problem isn’t necessarily that LA’s economy is faltering or wages are too low. Quite the opposite. Trulia’s chief economist Ralph McLaughlin says, "a combination of strong job growth and little new housing supply," as the reason for LA’s housing woes. Too many people are looking for homes amid a significant lack of supply in the city’s housing market.
Even New York City fared better than LA. New Yorkers on average made $24,865 more than what was needed to buy a single family home in that metropolitan area. Sure, that probably means your house is actually in Jersey, but still.
Is it possible to stay just outside Los Angeles, and settle on a life as merely a part-time Angeleno? The city of Riverside is as close as you’ll get. Homebuyers there can actually afford a house on the average salary, with $16,508 to spare no less. Oh, but that commute...
Perhaps it’s a mass exodus to Des Moines that’s really in order. Sure, life will move a A LOT slower, but the $50,157 in salary you’ll save each year will go a long way in the Hawkeye State. Happy homebuying!
- The Most and Least Affordable Places to Buy Your First Home [Bloomberg]
- Saving for a House in LA Costs $68 per day [Curbed LA]
- The Median Price of a Starter Home in LA: $334,000 [Curbed LA]