The annual income needed to buy a home in Los Angeles skyrocketed past $220,000, a recent study found, with higher mortgage rates and inflation cutting deeper into household incomes.
That means the ability to own a home is a goal inching further and further away from more families and households in Los Angeles, where the median annual household income in 2020 was just over $65,000.
According to the residential real estate firm Redfin, the yearly salary needed now to buy a median-priced home in the city and comfortably make the mortgage payment is now $221,592, up nearly 41% from last year.
In Los Angeles, the high cost of housing has also played a role in making it the most overcrowded large U.S. county.
Across the U.S., home buyers need to earn $107,281 a year, or 45.6% more, in 2022 compared with the previous year to buy a typical home, the study conducted by Redfin found.
Rising mortgage rates are the leading factor for the higher housing cost, according to the study, which found that from February 2020 to October 2022, the monthly payment for a family buying a median-priced home increased about 70%.
Home prices have also remained relatively steady, meaning that those who can still afford a home need to readjust their budgets, while others have been priced out.
“High rates are making buyers rethink their priorities, as many of them can no longer afford the home they want in the location they want,” said Chelsea Traylor, a Redfin agent.
The biggest spike has been in Florida, where the average mortgage payment increased more than 73% in North Port, where an annual salary of $131,535 is now needed to afford a home. The salary needed to buy a median home increased to $128,892 in Miami as well, a rise of more than 63% in a single year.
In 93 metro areas analyzed by Redfin, the agency found all of them needed at least a 30% salary increase to buy a median-priced home. Prospective home buyers in at least half those areas needed to make a minimum of $100,000 a year.
Redfin’s study compared median monthly mortgage payments in October 2022 and October 2021, and considered an affordable monthly payment to be no more than 30% of the home buyer’s income.
The study also found that although some areas in California — like the Bay Area — had “smaller-than-average” increases in income requirements, the state is still home to five of the most expensive places to own a home.
In San Francisco, the salary needed to buy a median-priced home soared to more than $402,000 and, in San Jose, a salary of more than $363,000 was needed to make the monthly mortgage payments. In Anaheim, home buyers needed about $254,000 a year, followed by Oakland, with a required salary of $247,559, and Los Angeles.