Most Los Angeles renters are probably all too aware of the city’s high housing costs, but a new report from the Federal Home Loan Mortgage Corporation breaks down how the Los Angeles area compares to other regions in terms of housing affordability.
Drawing from four separate studies, the report concludes that Los Angeles is the third-most rent burdened metropolitan area in the nation—behind only Miami and San Diego.
That doesn’t mean that rental prices are higher in those cities. In San Diego, rents are slightly more expensive, but in Miami, the median rent is 12 percent lower than in LA. The report examines how pricy rents are relative to typical incomes.
Under federal guidelines (used in the report), tenants spending more than 30 percent of their income on housing are considered to be cost burdened, since the amount of money they spend on rent can make it difficult to afford other necessities like food and healthcare.
In the LA metro area, which includes Los Angeles and Orange counties, the median rental price was $1,340 in 2018. To afford that price without spending more than 30 percent of your monthly income, you’d need to earn $53,600 per year.
But data presented in the report show that a typical renter in Los Angeles brings home just $44,000 per year.
In other cities, including San Fransisco and San Jose, rental prices are much higher—but so are wages. With a median price of $1,840 per month, San Jose has the costliest rents in the nation.
But the San Jose metro area’s median renter income is $75,000, meaning that a typical tenant there can still spend less than 30 percent of her income on rent if she lives in a median-priced apartment.
But as the report points out, half of all renters earn less than the median income, and rent burden can be much greater for lower earning residents. In the Los Angeles metro area, a renter earning California’s minimum wage of $11 per hour in 2018 would have needed to work 90 hours per week to comfortably afford a typical one-bedroom apartment.
How do those numbers translate to the city of Los Angeles, where minimum wage rose to $13.25 last year?
According to Apartment List, which bases its rent calculations on census data, the median price of a one-bedroom apartment in Los Angeles stood at $1,360 last month. Even after the minimum wage hike, a renter would need to work roughly 79 hours per week to pay that price without going over the 30 percent threshold.
Steve Guggenmos, vice president of multifamily research at Freddie Mac, says in a statement that the results of the organization’s analysis show that supply of affordable housing “just hasn’t kept pace with demand in many metros, and that’s pushing affordable rents out of reach for millions of American families.”
That’s particularly true in Los Angeles, where the report indicates that fewer rental units are affordable to median-earning renters than in any other major metropolitan area.
A separate study released last year by the California Housing Partnership and the Southern California Association of Nonprofit Housing found that 568,255 new affordable housing units would be needed to meet demand in LA County.
Comments
It’s the supply of housing generally, not the supply of "affordable" housing. If you build enough housing to start with, prices don’t spike and it remains affordable, and you don’t have to do weird, counter-productive measures like inclusionary zoning or rent control.
By disqusted on 04.02.19 4:42pm
Also, people can move to other cities/states that are more affordable.
By Vince Tagliano on 04.02.19 5:08pm
I did. Portland, Oregon. You’d hate it, it rains all the time. Please tell everyone how awful it is.
By bovsklo on 04.02.19 5:46pm
Portland is hardly a bargain anymore and prices are rising fast there with many people complaining about gentrification and Californication.
By LA Denizen on 04.02.19 9:51pm
Prices in Portland spiked over the past decade, they are flattening out now as a lot of new supply has come online. It’s supply-and-demand in action. That being said, the state legislature and Portland city council are hell bent on passing all sorts of draconian rent control and other restrictions, which will depress the new supply going forward and then rents will inevitably rise again. They’re trying out San Francisco housing policies but thinking that somehow they won’t get exactly the same results. Tremendously dumb.
By disqusted on 04.03.19 3:55pm
Ok start packing sis
By Kermit Kardashian on 04.03.19 10:34pm
A city can survive and be unaffordable, but a whole metro region; I’m no so sure about that being sustainable over a long term. All regions need a mix of housing price points because not all people and families wages are triple the median wage. Teachers, municipal workers, first responders, low wage earners in the service economy all need places to stay. If those works cannot be acquired because the cost of living is too high, it seems like a regional decline would eventually take place.
By mthome on 04.06.19 3:34pm
Time to thin the herd. Overpopulation just isn’t working out the way progressives hoped it would.
By Vince Tagliano on 04.02.19 5:07pm
Overpopulation just isn’t working out, period.
By umineko on 04.03.19 2:08pm
…and in other news, the sky is blue.
By princsskmb on 04.02.19 5:19pm
Interesting….but don’t we all want to live here because we want to live in a great city not a cheap city. If you are looking for cheap there are plenty of second tier cities but you won’t have the chic shops, gourmet restaurants, or neighborhoods populated by creatives, influencers, and varied movers and shakers.
By lady who lunches on 04.02.19 6:15pm
Actually, no – I want to live here because I’m from here (4th generation), my life is here, and I love everything about the place except for the overpopulation and only recently ridiculous increase in cost of living. I could not care less about the chic shops and restaurants and would be thrilled to never have to cross paths with an influencer or mover-and-shaker again!
By umineko on 04.03.19 2:07pm
THIS
By Kermit Kardashian on 04.03.19 10:35pm
Good thing there were no people crowing about "overpopulation" when your great-great-whatever moved to the LA area and displaced the indigenous population, no? Xenophobia and thinking the accidental location of your birth entitles you to anything beyond your crappy opinion so so gauche.
By disqusted on 04.04.19 12:47pm
Honey, many of us cook at home and could care less about trendy shops and restaurants. You could move to a second-tier city and let someone else have it if you have so much to say!
By Kermit Kardashian on 04.03.19 10:37pm
The article about developer Thomas Botz raising the rent on his Chinatown apartment reminds me of the situation with the owner of Wurstküche evicting the family living behind his business in Venice. I’m torn that low-income families get placed in these types of situations but I’m also 100% for Home Owners and Business owners who follow the law and rules being able to do as they please with their properties. With that said… Botz should be reasonable and maybe gradually raise his tenant’s rent instead of one large Kaboom!! of a rent hike can truly tear families and communities apart. It’s a puzzle no one seems to have an answer for.
By subaruwrx on 04.02.19 6:49pm
Botz is reasonable.
Whats unreasonable is expecting rents that are 25% of market to be maintained after the subsidy agreement expires, or the 20+ year tenants expecting perpetual subsidy, rather than taking that time to prepare for the inevitable.
The Wurstkuche owner was very clear: "I don’t want to be a landlord". I wonder why that is?
He’s literally going to spend significant money out of pocket to "relocate" his inherited tenant who has done nothing in decades to better her situation, so he can receive ZERO RENT. This from a successful restaurateur who ran the gauntlet of LA City, LA County and state bureaucracy for years to open, and on a daily basis to stay open.
Yet Curbed seems puzzled as to why there is a "shortage" of rental housing.
Rent control has consequences.
By smartalex on 04.03.19 10:42am
Don’t give up LA! We can get to #1!
By not banksy on 04.02.19 9:55pm
A usual poorly written article with apple to oranges comparisons.
1) Lacks a comparison of median household income ($69k in LA and $93k in OC) to median rent $1340. Both of which are less than 25%; less than the 30% quoted
2) Author’s calculation of income is based on an individual versus household income
3) A one bedroom is perfectly suitable for 2 ppl or more (e.g. a couple, roommates).
Article sounds like a millennial’s dream…. I’m starting out and need an apartment to myself.
Roommates or living at home for while are perfectly okay. Another option is to commute from somewhere less expensive into the city.
By Constituents on 04.02.19 10:48pm
90 hours…. really? Why would a person making minimum wage be weighted against an average one bed room rent apartment?
Common sense. Lower income (e.g. min wage) = stay somewhere below average rent
By Constituents on 04.02.19 10:52pm
Yeah, this. If you’re making minimum wage why would you expect to live alone in a typical apartment. You should be sharing with several people and going to night classes.
By CaliSon on 04.03.19 3:56pm
As long as you have a place to live we should all be grateful.
By Kermit Kardashian on 04.02.19 11:36pm
Folks working in the service industries like Safeway or Starbucks are how cities are able to function. They’re not making more in the bay area Starbucks than they would in the one in LA. I think this report isn’t nuanced enough to realize how much burden it is to live in the Bay area. There may be less "burdened" renters in the bay area, but those that are burdened are REALLY burdened compared to those in LA.
By savvysearch on 04.03.19 2:53am
Exactly. I’ve read reports that even Silicon Valley Tech Company employees sleeping in their cars because it’s cheaper/easier than living 2 hours away in an area that’s affordable.
By subaruwrx on 04.03.19 10:09am
https://www.theguardian.com/us-news/2019/mar/26/blackstone-group-accused-global-housing-crisis-un
They will suck all the blood out of the working man.
By ByeByeLA on 04.03.19 4:16am