Los Angeles Now Country's Least Affordable Housing Market
Home prices have been rising across the country but especially in Los Angeles. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), LA is now the least affordable housing market in the United States as of Q3 2017.
With the median home price all the way up at $580,000 in what the data defines as the Los Angeles-Long Beach-Glendale area, that puts buying out of reach for a large portion of the area’s residents. The HOI lists the median income at just $64,300, which means just 9.1 percent of residents can afford a home. That low figure is what earns LA the designation as the least affordable housing market.
Los Angeles takes over the title after a five-year run for San Francisco. For LA, affordability has fallen rapidly in recent years. After reaching a high of 49.5 percent in Q1 2012, affordability has fallen nearly every quarter since. Even as recently as Q1 2016, 15.6 percent of residents could afford a home in LA. That number’s now dropped considerably as prices have skyrocketed.
For several years now, median income has stayed pretty static in Los Angeles, hovering between 61,000 and 65,000 annually. Meanwhile, median home prices have risen $83,000 since the start of last year.
Should current trends stay the course, LA could become even less affordable over time. However, there’s hope that the housing crisis is addressed somewhat by the recently passed CA State Bill 35 which should lower bars for development and potentially lead to an increase in inventory. More inventory could lead to a decrease in median pricing — unless, of course, many of the resulting developments are luxury housing.