Prices have grown much faster than incomes in the last few years, a Zillow research director said. That’s pushing L.A. housing out of reach for many.
By Tim Logan
August 20, 2014
Los Angeles and Orange counties are the least-affordable housing market in the country. And it’s likely to only get worse.
That’s according to new figures due out Thursday from real estate website Zillow, which found that renters here need to pay more of their income to afford a place to live than anywhere else in the country.
Adding to the affordability woes, Zillow is predicting that home prices here will climb 5.7% in the next year, outpacing likely growth in most people’s paychecks.
The real estate website crunched for-sale and rent prices and incomes across 35 housing markets in the U.S. It found that a family earning the median household income of $59,424 in metro Los Angeles — defined as L.A. and Orange counties — would need to spend 47.9% of its income to afford a median-priced rental apartment, and 42.6% to afford a median-priced house. Both were the highest share in the U.S., though L.A. tied with San Francisco in for-sale housing.
Prices here have grown much faster than incomes in the last few years, said Svenja Gudell, Zillow’s senior director of economic research. That’s pushing L.A. housing out of reach for many.
“For people who aren’t on the high end of income distribution — teachers, police officers — it becomes a real issue,” she said.
Zillow’s figures echo a recent study by UCLA’s Ziman Center for Real Estate, which also pegged Los Angeles County as the least-affordable market in the country, and said that the rent crunch here has spread up the income ladder, to affect more middle-class households.
It’s a twofold problem, economists say.
Housing prices here are high, though not as high as in the Bay Area, and comparable to New York, Washington and Boston. Those places score better on affordability measures, though, because people there tend to earn more than the average Southland resident. Median household income in the San Francisco area in the second quarter was $76,239, according to Zillow; in the L.A.-O.C. area it was $59,424.
“Los Angeles has a lower median household income than comparable cities such as New York or San Francisco but only a small difference in median rents,” the UCLA report said.
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