L.A. is second least affordable home market for the middle class
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The Los Angeles area is second behind San Francisco as the nation’s least-affordable housing market for the middle class, according to a report from Trulia.
Staff L.A. Biz
The Los Angeles area is second behind San Francisco as the nation’s least-affordable housing market for the middle class, according to a report from real estate data firm Trulia.
A middle-class household earning the median income of $54,000 can afford just 22 percent of homes for sale in Los Angeles, based on whether the total monthly payment — including mortgage, insurance, and property taxes — is less than 31 percent of the household income, Trulia said. In San Francisco, only 15 percent of the middle class can afford a home.
Six of the seven least-affordable housing markets in the country were in California. San Diego was third with 25 percent, while Orange County ranked fifth at 26 percent, San Jose was sixth with 30 percent and Ventura County was seventh at 33 percent.
Looking under submarkets in L.A. county, Trulia’s survey found that in Pasadena and the San Gabriel Valley 626 area code, only 11 percent of the middle class could afford a home. In the 310/424 area, encompassing the Westside and beaches, homes were within reach of 14 percent of the middle class. The rates were 16 percent in 213, downtown and central L.A., and 16 percent in the San Fernando Valley’s 818 and 747 area codes.
In the past year, affordability has fallen modestly, hurt by rising home prices, but helped by lower mortgage rates, Trulia said. Nationally, 59 percent of homes for sale are within reach of the middle class, compared with 62 percent last October.
High-income metro areas are generally less affordable than low-income metros because high-income households bid up home prices, and high prices push out lower-income households, according to Trulia Chief Economist Jed Kolko. In addition, higher-income metros tend to have less new construction than lower-income metros.
“Unless incomes increase substantially, homeownership will slip further beyond the reach of many households,” Kolko wrote in the report.
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