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 down payment).
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 buyer 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 down payment (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.
But what about apartments for rent in LA and the rest of the country? If you can’t afford in LA, should you look at other options in smaller cities, maybe even the Midwest? According to ABODO, a city like Minneapolis shows apartments that are renting for almost $1,200. So, how is that any better than LA, when the same company shows rents are for just a few hundred dollars more.
Renting or owning, it’s all expensive, especially in the City of Angels.