Buying a home in Los Angeles and Orange counties costs 10 times more than what a typical family earns in a year, a new housing report shows.
That’s double what it was in 1980, when the price of a house was five times the median household income, according to Harvard’s Joint Center for Housing Studies.
The L.A.-Orange County metro area had the fourth-highest price-income ratio out of 385 U.S. metro areas listed in the report, which came out in late June.
In the Inland Empire, home prices were more than six times greater than its median income, the 37th highest price-income ratio in the nation.
San Diego County’s median home price was almost nine times greater than the median income, 11th highest.
By comparison, U.S. home prices were about five times the nation’s median household income, the report said.
The numbers were part of the Harvard center’s annual State of the Nation’s Housing report. The report compared 2023 median prices for existing single-family homes with Moody’s Analytics estimates of household incomes.
“Nationwide, home prices have jumped a shocking 47% since early 2020, … and 115 percent since 2010,” the report said. “As home prices have risen, they have grown to many multiples of household income.”
In Southern California, the median house price has jumped 45% since early 2020 and 183% since 2010, state Realtor data show.
Using numerous measures of home prices and rent, the report concluded that housing in America has been getting increasingly unaffordable.
“Both homeowners and renters are struggling with high housing costs,” the report said. “Millions of potential homebuyers have been priced out of the market by elevated home prices and interest rates. … For renters, the number with cost burdens has hit an all-time high as rents have escalated.”
More than 56% of Southern California renters are “cost burdened,” meaning they spend more than 30% of their income on rent, according to the report. Almost a third spend at least half of their income on rent.
Those issues are even more exaggerated in Southern California and in the state as a whole.
For example, an Orange County homebuyer with a 3.5% down payment would have to earn just over $420,000 a year to afford payments for a median priced home. That’s the second-highest minimum income for homeownership out of 179 metro areas.
San Jose had the nation’s highest minimum income, with buyers needing to earn more than $566,000 a year to afford a median-priced home.
San Diego County ranked fifth among U.S. metros, with a required income of almost $302,000, according to the report. In Los Angeles County, the minimum income is $253,000, while the Inland Empire’s minimum totals almost $178,500.
Home prices have been rising steadily for the past 12 years, and economists don’t expect them to drop in the near future. Despite high mortgage rates and low affordability, prices keep rising because the number of homes for sale is well below pre-pandemic levels.
Real estate data firm CoreLogic predicted that this year’s U.S. home price will be 5.7% higher than in 2023.
“Housing supply and affordability remain major challenges,” the study concluded. “The number of households in need of assistance continues to grow even as funding for subsidies fails to keep up, contributing to rising homelessness.”
