I’ve lived in a suburb of Los Angeles all of my life. Growing up, I lived in a house with my parents in a modest middle-class neighborhood that today I’m priced out of with homes starting around $500,000. When I became an adult, I moved into apartments with roommates, then with my husband. All the while, rent increased with each move. Now at the time, that made sense to me. Rent would increase every couple of years as I also increased the square footage of the unit with each move.
However, I’ve known for a few years now that Los Angeles is just not a very affordable city for median income earners like myself. I’ve stayed because I have roots here and a good job, and it’s also what I know. Yet, recent news stories are popping up on television and in articles online that justify what I’ve known for a while – Los Angeles is one of the most expensive cities in the nation, especially when it comes to housing.
Rent in particular is the topic of discussion – for most people in Los Angeles, rent is eating up 47% of their income. Low income housing is becoming hard to find and some rent-controlled apartment complexes are evicting their tenants to build luxury apartments in their place. Basically, Los Angeles is becoming a city of have’s and have-not’s with absolutely no middle class.
I don’t want to sound doom and gloom as I’ve been fortunate over the past three years with my rent staying as-is with each lease agreement. However, my building recently increased rent to new tenants by $200 a month or 9%. I’m a little worried that when I renew my lease in the fall, my rent might increase as well which would eat up more of my income. Using rules-of-thumb as a guide to what I can afford, no more than 30% of my income should be applied towards rent or housing. Currently, I’m paying 34% which is above the recommended amount.
Gee, Los Angeles, I love your weather but I’m beginning to think it’s just not worth the cost!
KPCC radio is putting together a series on how high rent in Los Angeles is hurting the economy and included an interactive map of how much people are paying for rent based on a percentage of income. It’s quite eye-opening.
Since I’m more of a solutions person than a “The Sky is Falling!” kind of gal, my options include moving farther away from the city to places where rent and housing are a little more affordable, or making a big move out of state which I’ve started to consider over the past few years. There are a lot of factors to consider with both options, but in the long run it might make sense to move to a more affordable area even if it means a lower income.
Have rents increased in your area? Is housing more or less affordable now than before the recession?
It’s been well over ten years, but I remember being absolute shocked at home prices the one time that I visited California. I was in the San Diego area at the time.
Michigan has recovered pretty well from the lows hit in 2009-2010 but the hits here were so devastating that we’re still a long ways away from recovering the highs set in the real estate market.
@Money Beagle- Prices dropped for about two years, but have been on the climb. They are almost back to bubble prices, which is jaw-dropping. Now, rent is climbing to keep up with home prices. It’s just crazy!
The housing market is crazy in California. I guess the major urban centers. Once you get out, things are a bit more reasonable, but they you’d have to drive so long to get to work. Sometime I envy our parent’s generation. The lucky ones picked up some properties at an affordable price and held on to them.
@Joe – Home prices in the urban areas definitely seem out of reach especially compared to salaries. I know that when our parents were younger, interest rates were higher, but home prices were more reasonable. Perhaps it’s a wash. However, at least interest rates are variable and you can always refinance. Not so with the price you paid for the house!
The real estate industry is insane in Florida. I think the significant locations. Once you get out, things are a bit more affordable, but they you would have to generate such a long time to get to work. Thanks for sharing.
The problem is a problem of policy. Prop 13 allows people to keep homes for 3 generations and pay practically no taxes. Imagine being able to gift something to your grandkids and their cost basis is only slightly higher than what you paid for it. Some… MANY people in Culver City, still are taxed on property values in the low tens of thousands… i.e. Grandma leaves her house that she paid $18,000 for in 1940, and now it’s worth $1.2 million, but grandson pays taxes on $18,450. It’s insame to do that…. the other issue that compounds the problem is that everyone fights new construction and new buildings, so new housing is extremely limited. The fact is… there should be more skyscrapers in LA, but the residents fight it, and have no incentive to sell since Prop 13 protects their a$$.