Home Prices Skyrocket In LA, Pricing Out Most Buyers

LOS ANGELE, CA — Housing affordability plummetted across the Southland as prices skyrocketed in the first quarter of the year.

Limited supply, pent-up demand, and low interest rates all contributed to climbing home prices across Southern California with places like Orange County recording a median home price of $1 million. Only 20-25 percent of residents in Los Angeles and Orange County are able to afford a single-family home. Statewide, the median home price jumped 22 percent over the last year, according to the California Association of Realtors.

Continuing a longstanding trend, that left most people priced out of the Golden State housing market. The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California dropped from 35 percent to 27 percent, year over year, according to the association. In less than 10 years, affordability in the Golden State has been cut in half.

Industry experts don't expect the trend to slow or reverse anytime soon. Analysts at John Burns Real Estate Consulting predict that prices would continue to climb by double digits through the end of the year and at a slower but steady climb in 2022.

“It is a feeding frenzy right now,” Rick Palacios Jr., the firm’s director of research toldThe Los Angeles Times. “It’s incredibly competitive.”

Among Southern California counties, Orange County was the least affordable with just 20% of residents able to afford the median home price of $1 million. Orange County residents would need to earn $182,400 per year to afford average monthly home payments of $4,560.

Los Angeles County was at 25% affordability for the first quarter, with a median home price of $682,360. To buy a home in Los Angeles, residents would need a minimum annual income of $124,400 to be able to pay the $3,110 monthly mortgage, according to CAR.

C.A.R. estimated that L.A. County residents would need a minimum annual income of $124,400 to afford the $3,110 in monthly home payments, including taxes and insurance.

San Bernardino County was the most affordable at 45% and a median home price of $399,000.

Statewide, a minimum annual income of $131,200 was needed to qualify for the purchase of a $720,490 statewide median-priced, existing single-family home in the first quarter of 2021. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,280, assuming a 20% down payment and an effective composite interest rate of 3.08%.

Housing affordability for condominiums and townhomes also declined in first-quarter 2021 compared to a year ago, with 40% of California households earning the minimum income to qualify for the purchase of a $535,000 median- priced condominium/townhome, down from 44% a year ago and from 41% in fourth- quarter 2020, C.A.R. said.

An annual income of $97,600 was required to make monthly payments of $2,440.

Compared with California, more than half of the nation's households, 54%, could afford to purchase a $319,200 median-priced home, which required a minimum annual income of $58,000 to make monthly payments of $1,450, according to C.A.R.'s report.

Nationwide affordability fell from 59% a year ago.

C.A.R. has more than 200,000 members and is headquartered in Los Angeles.

City News Service and Patch Staffer Paige Austin contributed to this report.