It’s no secret that the housing market in Los Angeles is a sizzling one, and doesn’t seem to be showing signs of slowing down any time soon. With prices as high as they have been over the recent past, housing affordability has been a real issue.
According to the California Association of Realtors (CAR), buyers will need to make six figures in order to afford a home in LA County. Right now, the median price for a home in the area is $536,100, and $104,330 needs to be earned per year in order to comfortably afford it.
Considering the average monthly mortgage of $2,610 based on that figure – which includes taxes and insurance – a recent report from CAR finds that only about one-quarter of households across the US can financially afford to buy at that price point.
Compare that price to $240,900, which is the average median home price across the country, translating to an average mortgage payment of $1,170. To comfortably afford a home in this price range, the minimum salary required is $46,830, which 57% of households across the nation are able to meet.
In Orange County, buyers require a minimum annual income of $143,850 in order to be able to afford a $740,070 median-priced single-family home. Only 23% of area households make that much money.
Los Angeles’ affordability issue has only been getting worse thanks to a squeeze on inventory that is continuing to drive prices up. It’s not necessarily an issue that’s unique to LA – California as a whole is experiencing a housing affordability crisis, and has been for a while now. With the median home price in California currently sitting at $515,940, only 31% of households across the state can afford to purchase a home.
CAR’s recent report showed that the minimum income needed to buy a home in the Los Angeles metropolitan area spiked 69% from 2012 when the minimum annual salary needed to afford a median-priced home in the area was $53,780, which is a lot less than today’s minimum.
Of course, the median price for homes in LA County ranges quite a bit from one community to the next. For instance, the median home price in the Watts community of LA is currently $295,800, compared to $2,999,300 in Beverly Hills, which is easily one of the most expensive communities in all of LA County. Some of the most expensive zip codes in the state – as well as the country – are located right here in LA County.
It will be interesting to see what happens in the fourth quarter this year in terms of affordability, but with an uptick in wages and low interest rates, it doesn’t look like it will change any time soon.
If your goal is to get into the luxury housing market in Los Angeles in the near future, you would be well advised to work with experts in this particular niche. Our team of professionals has plenty of experience in the LA luxury real estate market, and would love the opportunity to help you achieve your specific goals. Call our team today to start on the path to realizing your goals in LA real estate.
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(all data current as of 7/25/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.