Any wonder the middle class is fleeing the Los Angeles area?
“A typical Los Angeles County buyer in November got a $5,670 monthly payment, assuming a 20% downpayment. That’s the eighth highest since 1988, a cost 3% below a year ago but 98% higher in five years.
Adding to local homebuying’s financial challenge are the wages required to complete a purchase. If this hypothetical buyer spends 40% of their income on this payment, they’d need to earn $170,000 a year – plus have $173,800 in cash for the downpayment.
Pressure points
Why? Start with the Los Angeles County median sales price of $869,000 for the month.
You had to buy a home today, could you afford it or spend money on a U-Haul to a Free State?
Got $5,670 a month? Los Angeles County house payments surge 98% in 5 years
November’s norm is $5,670 monthly
By Jonathan Lansner, Orange County Register, 1/21/25 https://www.dailybreeze.com/2025/01/21/got-5670-a-month-los-angeles-county-house-payments-soar-98-in-5-years/?utm_email=95C3E5E4E4E5A580647814C571&lctg=95C3E5E4E4E5A580647814C571&active=no&utm_source=listrak&utm_medium=email&utm_term=Story+Button&utm_campaign=scng-db-breakingnews&utm_content=alert
“How expensive?” tracks measurements of California’s totally unaffordable housing market.
Buzz: Los Angeles County house hunters face mortgage payments double from five years ago.
Source: My trusty spreadsheet tracked this yardstick of affordability by looking at its 37-year history of CoreLogic homebuying stats through November and swings in the 30-year fixed mortgage rate from Freddie Mac. Estimated payments were calculated by combining a month’s median sales price and mortgage rate.
The pain
A typical Los Angeles County buyer in November got a $5,670 monthly payment, assuming a 20% downpayment. That’s the eighth highest since 1988, a cost 3% below a year ago but 98% higher in five years.
Adding to local homebuying’s financial challenge are the wages required to complete a purchase. If this hypothetical buyer spends 40% of their income on this payment, they’d need to earn $170,000 a year – plus have $173,800 in cash for the downpayment.
Pressure points
Why? Start with the Los Angeles County median sales price of $869,000 for the month.
That’s sixth-highest since 1988, 3% above a year ago and 39% higher over five years. Compound that expense with mortgage rate gyrations.
Now November’s 6.8% average is below 7.4% a year earlier, but this financing benchmark was 6.8% two years ago, 3.7% five years ago, and has averaged 6.2% since 1988.
Bottom line
Stubbornly lofty prices and rates translate to buyers balking and a dramatically sluggish homebuying pace in Los Angeles County.
Contemplate buyers completing 4,500 transactions a month on average during the last two years, a pace 34% below the previous two years and 43% slower than the sales counts in 37 years.
Or look at the slump this way: Only 4% of all two-year periods since 1988 had fewer sales.
PS: The best news for house hunters is growing choice.
Countywide, there were 9,720 average active listings of existing homes during the past year, according to Realtor.com. This supply of residences for sale is 23% above the previous 12 months – but 27% smaller than pre-pandemic 2019.
