New study: Housing costs are exacerbating gap between rich, poor in LA

To understand income inequality in Los Angeles, look no further than the housing market.

A new report from Apartment List finds that the cost of living in Los Angeles has risen to such a degree that the lowest earners now spend a higher percentage of income on rent than top earners.

For its housing market report, Apartment List crunched data on income inequality in the country’s 100 largest metro areas. In each one, median homeowner income tops median renter income. Los Angeles ranked ninth in local income inequality, with a wealth gap that rose by 10 percent from 2008 to 2017.

In the Los Angeles area, the top-earning households made 13.4 times more than the bottom earners in 2017, Apartment List found. But lower-income residents in the metro area paid 14 percent more for housing that year than they did in 2008. Compare this to upper-income earners who paid 2 percent less for housing during the same period.

Housings costs are 26 percent higher for the poorest one-quarter of households. Widening the wealth gap is the fact that the most affluent Angelenos have enjoyed wage increases over the same period, according to Apartment List.

The ramifications are steep. Renters are left with little income to spend on necessities such as food, clothing, and medical care.

During his state of the city address earlier this month, Los Angeles Mayor Eric Garcetti directly linked the struggles of renters to the local homeless crisis.

“Too many parents in this city are moving their families into cars because they’re living paycheck to paycheck and can’t keep up with the rent,” he said.

Garcetti discussed how landlords have illegally evicted Angelenos living in rent-controlled housing and announced a program to give low-income tenants in this predicament free legal representation to stop homelessness before it starts. But he also acknowledged that the suffering tenants face “continues to outpace solutions.”

The problems renters face in Los Angeles aren’t unique. The Apartment List study found that across the U.S., renters of all incomes spend a greater share of their earnings on rent than they did in 1980.

In contrast, homeowners are paying less for housing than they did a decade ago. They’ve taken advantage of reduced mortgage rates and a variety of refinancing options to lower their housing costs even as home prices rise.

Rental prices in the region and nationally also continue to go up, a trend Apartment List blames on an influx of high-income renters.

These renters may not be able to afford a home in a metropolitan area as expensive as Los Angeles, but they earn 23 percent more than the median renter did a decade ago. As people with more money enter the rental market, landlords have raised rents. Nationally, the nominal median rent paid has jumped by 23 percent, Apartment List found.