Home prices in Los Angeles are quickly getting out of reach for many residents, according to a new report from the California Association of Realtors. It finds that just one in four residents of LA County make enough to afford a median-priced home in the area.
The association’s Housing Affordability Index shows that a typical LA County home cost $553,330 in the fourth quarter of 2017. With property taxes and insurance factored in, that comes out to a monthly payment of $2,790 for buyers (assuming they put down a 20 percent downpayment).
Given those figures, prospective homebuyers need a salary of $111,730 (based on household income) to make those payments without becoming cost-burdened—meaning that more than 30 percent of income goes toward housing. Unfortunately for most people, 75 percent of LA County residents don’t earn that much.
Historic data shows it’s gotten much harder to afford an LA home in recent years. As recently as the first quarter of 2012, more than half of residents took home the required income to purchase a home in the area. Since then, though, prices have risen dramatically and incomes haven’t quite caught up.
In the wider Los Angeles metropolitan area, a salary of $53,780 was required to buy a median-priced home in 2012—compared to $100,210 today.
The outlook is a little better if you’re a first-time homebuyer looking for a starter house. With a median price of $470,330, starter homes in LA County are affordable to 43 percent of residents. Of course, they’ll first have to save up for a hefty $94,066 downpayment (after that, payments are $2,400 per month).
Not surprisingly, the report finds that homes in LA are far less affordable than they are nationwide. Across the country, buyers need a yearly income of $50,040 to purchase a typical home (median price: $247,800). That means that buying is still within reach for 56 percent of Americans.
If only more of those affordable homes were in LA.
Comments
That’s what happens when you restrict the supply of something that’s really desirable – the cost goes way up and only the rich can afford it. Zone for and build more housing, not that complicated.
By disqusted on 02.19.18 2:59pm
Wait, are you telling me that government economic central planning, bureaucracy and over regulation has negative consequences?
By DJCRoy on 02.19.18 4:44pm
Well in some instances, like regulating pollution, it causes bad actors to internalize costs they would otherwise foist on the public without paying for, resulting in more accurate pricing for the cost of producing a good or a service, and therefore a theoretically more efficient market. In the case of things like seismic requirements for new building construction, regulations are also good as they are designed to save lives and prevent larger costs in the event of an earthquake. I kind of like food safety regulations. It means I’m rolling the dice a lot less every time I eat. Traffic lights are regulations. Isn’t it nice to be able to cross the street or drive through an intersection with at least a decent amount of certainty a driver won’t plow into you?
In the case of zoning to preference SFRs in vast swaths of a popular major city, or in the case of rent control, those are examples of bad regulations that have negative consequences and drive the cost of housing up.
Regulations are neither inherently good nor bad just because they are regulations. So no, I’m not giving you that blanket, tired, conservative cliche statement at all.
By disqusted on 02.19.18 6:27pm
Where are you gonna find a $555k house in LA??
By mucho_comida on 02.19.18 3:00pm
In an undesirable neighborhood – there’s tons.
By midcityjuan on 02.19.18 3:18pm
There are a couple hundred listings under $550k in the zone with the following border: south of the 10, north of the 105, east of the 405, and west of the 710. That’s still LA, dude.
By disqusted on 02.19.18 4:04pm
I would make the east boundary the 110, but that’s still a huge area with tons of good listings. Look south of the 10, north of the 105, east of the 405, and west of the 110
By SocalChill on 02.20.18 7:14am
I’d rather rent in a safe / desirable area than buy in a sketchy hood I’m afraid.
By SupaZT on 02.20.18 10:17am
Today’s sketchy hood could be tomorrow’s trendy paradise thanks to the magical powers of gentrification.
By disqusted on 02.20.18 12:01pm
Maybe they are looking at Condos? In which case there are tons of condos under 500k
If it is just SFHs, well they are almost universally limited to a required 5000 square feet of land. They aren’t making any more land, so the price is going to keep going up.
By RXBXUXNX on 02.20.18 2:47pm
We have to stop putting up barriers to building affordable housing. It is as simple as that. One of the first steps toward doing that will be to vote out every single member of our city council starting with Koretz and Ryu and we need a new mayor while we are at it. Just one of their recent ideas for solving the affordable housing crisis was to make it more expensive to build housing by adding an up to $15 per square foot development fee to new constructing. We need new city leadership that doesn’t try to solve a problem by exacerbating the the exact problem they say they are trying to solve.
By lady who lunches on 02.19.18 3:40pm
Yea, that new fee is complete BS.
By dudeimstarving on 02.19.18 5:48pm
We just need more housing in general. There is plenty of affordable housing in the inland empire, valley, riverside etc…The problem is everyone wants to live West of DTLA and even more people want to live west of the 405.
By LeBasque on 02.19.18 11:43pm
LA’s economy is expanding quickly (which is a good thing). LA needs to make building housing more streamlined, but also those who can’t keep up as quickly should relocate elsewhere for a better life. Improve supply AND decrease the demand by supporting relocation out of LA/CA.
The affordable housing projects do little for normal people. They are for people that are way below the median income.
By Constituents on 02.20.18 6:12am
A household income of $111K means 2 adult incomes of $55.5K. Not that crazy, although saving for an adequate down payment is a challenge for people currently renting.
But yes, most of these homes are in undesirable places.
By MMVic on 02.19.18 6:06pm
Yeah, they both also have to have solid credit scores, and that $55.5k needs to be a salaried income for typical lending (unfortunately for a lot of would-be buyers in the LA market, lenders do not tend to look nearly as kindly at freelance income, so you need an even higher income if you’re in entertainment). Plus if you have other obligations like student loans, that discounts your income for lending purposes. And a $550k house means a $110k down payment. It’s hard out here for a pimp.
By disqusted on 02.19.18 6:32pm
If you were willing to take out student loans, then you should pay those off before you worry about buying a house or starting a family.
Why exactly should the bank take a chance on someone who doesn’t have good credit or stable income?
Did we not learn anything from the "Savings and Loan Crisis" (mortgages for everyone!)?
By smartalex on 02.19.18 7:23pm
Student loan debt is a product of the growing welfare and pension obligations. We are not redistributing wealth just from the rich to the poor but from the poor to the poor and the middle class to the middle class. Anyways, I agree with lahope, go into the neglected neighborhoods and put the effort and time into making them better. Nothing is beyond hope.
By CaliforniaGoldFarmstand on 02.19.18 8:39pm
Did I say any of those things?
By disqusted on 02.20.18 12:02pm
a lot of places that people now consider desirable were not so desirable 20 years ago. sometimes you need to blaze a trail, buy a house in a somewhat sketchy hood, fix it up and hope others do the same. there is no way LA is going to get a whole lot less expensive – it’s a coastal city with the best weather in the country. or if you don’t have the money for a house go in with a friend and buy a duplex etc. if you have the determination you can make it happen. if you’re making 30k a year well then forget it. either spend your life renting or move to a texas or someplace like that with much lower housing costs. there is plenty of land already zoned for residential development but its really expensive to buy an existing house, tear it down and build new homes – they have to sell for a high price or it wouldn’t make sense to build. builders need to make a profit if they are going to take the risk.
By LAoneWay on 02.19.18 6:13pm
Absolutely. Remember when Culver City was less desirable? Remember when Venice was less desirable? Remember when Baldwin Hills/West Adams/Leimert Park was less desirable? Not anymore. Buy right on the edge between currently desirable and a less desirable area, and I think you’ll be surprised what happens in a few years. Lots of house flipping can be a really good sign in that type of neighborhood (Cheap houses to buy, yet they will sell for lots of money if they are remodeled).
By SocalChill on 02.20.18 7:17am
Ding, ding, ding!
And if not LA, then perhaps suburbs surrounding LA. Downey comes to mind. Also, there are houses in San Pedro that are still affordable in case you’re into coastal areas.
By bruintoo on 02.20.18 1:31pm
"Hey folks, sometimes ya just gotta gentrify!" – clueless internet as*hole
By nativespecies on 02.20.18 2:31pm
the choice is yours – buy and fix up or keep paying ever increasing rents to your landlord. either way i don’t care what people do. i’m in charge of my life and choices and reap the rewards.
By LAoneWay on 02.20.18 3:11pm
You ever bought clothing made with underpaid foreign labor because it was cheaper and that’s all you could afford, even though you know it might be exploitative for the person on the other end? Welcome to the reality of house shopping in Los Angeles. But go ahead and virtue signal all you want.
By disqusted on 02.20.18 3:16pm