The luxury Westside of Los Angeles is among the high income metropolitan areas that are the least affordable, even in the face of the high incomes of the households in these areas.
High income metropolitan areas are tending to present a greater problem of affordability than low income areas. One reason for this is that higher income earners are bidding against each other for still limited reasonably priced inventory driving up prices.
The higher income metropolitan areas also tend to have less new construction to add to existing inventory as opposed to lower income metropolitan neighborhoods.
Six of the seven least affordable markets for the middle class are found in California. Los Angeles ranks as the second least affordable area in the United States for the middle class with San Francisco taking the top spot. San Diego is third, Orange County is fifth and San Jose and Ventura county rank sixth and seventh respectively.
Currently a household in the middle-income bracket in Los Angeles would be able to afford only 22 percent of the homes currently for sale.
Recent data shows that across the country young adults under 35 years of age, referred to as the Millennials, are having an even bigger challenge. They are having a tough time finding jobs and their incomes are lower than the incomes of those in the older age categories.
Los Angeles ranks as the third least affordable housing market nationwide for Millennials. San Francisco is at the top of that list and Orange County comes in second.
Nationwide annual home price gains are at about 6.4 percent. The rate of appreciation is expected to fall in 2015 as affordability issues continue to present an obstacle to home purchases.
The ability to afford a home is expected to get more difficult for both Millennials and the middle class. Realizing the dream of owning a home is not likely to get any easier unless there is a substantial rise in incomes.
Affordability is typically measured according to government guidelines as having enough income to show the ability to make a 20 percent down payment and meet your home’s monthly carrying costs, including mortgage payment, taxes and insurance using no more than 31 percent of household income.
According to the anti-poverty charitable organization, Oxfam, the inequality in wealth is becoming greater robbing millions of people of better life chances and presenting one of the biggest barriers to ending global poverty.
The richest 1 percent of the people in the world are likely to control more than half of the globes total wealth by next year according to the study conducted by Oxfam.
While support is growing for Oxfam’s call for a fairer world, including leading economists and politicians, the appetite for Los Angeles Super Mega-Million Dollar real estate remains unabated.
For a free courtesy consultation, contact Bess Hochman, a top Westside Real Estate Broker for more than 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article. Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com.
“Bess is a master negotiator!” says Michael Donaldson, attorney & author of “Negotiating For Dummies.”
