According to recent data, only about 27 percent of households in Los Angeles County can actually afford to purchase a median-priced home. This is primarily due to prices in the area, which continue to steadily increase. In Northeast Los Angeles, for example, the median price of a home is $600,000. The price tag is even higher in Echo Park, where the median price is $800,000. With fewer homes available to buyers of all income levels, it is becoming increasingly difficult for first-time buyers to find a home that fits within their budget in L.A. County.
Unfortunately for Californians, nine of the ten markets in the country with the largest decrease in starter home affordability can be found in California. The increase in income required to purchase a median-priced starter home in these metro areas were as follows:
- Oakland: 19 percent when compared to 2012 with a median price of $374,000
- Los Angeles: 28.2 percent when compared to 2012 with a median price of $329,000
- San Jose: 26.6 percent increase when compared to 2012 with a median price of $585,713
- San Francisco: 24.7 percent increase when compared to 2012 with a median price of $714,000
- Sacramento: 23.3 percent increase when compared to 2012 with a median price of $217,900
- Orange County: 22.6 percent increase when compared to 2012 with a median price of $416,000
- Ventura County: 19.8 percent increase when compared to 2012 with a median price of $375,575
- San Diego: 18.1 percent increase when compared to 2012 with a median price of $327,450
- Riverside: 16.8 percent increase when compared to 2012 with a median price of $177,450
Recent reports have also found that starter home inventory has dropped significantly around the country. Big urban areas in California, however, have been hit particularly hard. In fact, the same report found that starter home inventory has essentially been erased in three of California’s major markets: Orange County, San Diego and San Francisco. Overall, starter home inventory in Los Angeles has dropped by 70.8 percent. Furthermore, due to rising prices, buyers in Los Angeles need to see their incomes increase by 28.2 percent when compared to their 2012 incomes if they hope to purchase a median-priced starter home in 2016.
Purchasing a Starter Home in Los Angeles
Recent data indicates that a median starter home in Los Angeles costs $329,000. At these prices, a starter home in Los Angeles will consume 88.1 percent of the income of the typical person who would be purchasing a starter home. On the other hand, the national average is 38 percent, a full 50 percent lower than what is taking place in Los Angeles.
As prices for starter homes continue to rise, buyers across all categories are finding themselves having to settle for smaller, less expensive homes than what they might actually be interested in purchasing. For example, those who might have been interested in purchasing a trade-up home are considering smaller, less expensive homes that might have otherwise fallen into the “starter home” category simply because homes in the next category up are too costly. As these homes are purchased by existing homeowners, its further tightens the inventory and drives up prices within the starter home category.
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(all data current as of 6/24/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.