Price of Starter Homes Out of Reach for Many Angelenos: Report

LOS ANGELES, CA - Low inventory and rising home prices are making homeownership more and more out of reach for most Angelenos, according to a report by the real-estate website Trulia.

Since 2012, inventory for starter homes has been dropping for 95 of 100 largest U.S. metropolitan areas, including Los Angeles, according to Trulia Inventory and Price Watch report released Tuesday. San Diego has the largest decrease in starter-home availabilities in California, with inventory dropping by more than 80 percent.

In Los Angeles, the number of available starter homes decreased by more than 70 percent.

RELATED:

• SoCal Home Prices Keep On Rising and People Keep On Buying

The ironic cause for this is a strong economy and employment market that is driving prices up. As a result, many people are trading down and buying up less expensive, smaller homes and inflating true starter-starter home prices, the report found.

"Rising prices are creating homebuyer gridlock," Trulia's chief economist Ralph McLaughlin said. "As the price of premium homes goes up, owners of trade-up homes are less likely to sell their current home and buy a premium home, thus further limiting the stock of trade-up homes."

This is creating a financial barrier for people looking to buy their first home.

Starter-home buyers in the Southland would have to spend more than 88 percent of their median income to afford a 30-year fixed rate mortgage — a 28 percent increase since 2012, according to the report. Nationwide, the number available starter-homes have dropped by 46.3 percent.

The median home price in Los Angeles County is now $486,523, an increase of 4.2 percent from February 2016, according to CoreLogic.

This is a case of good news/bad news for sellers, McLaughlin said. While sellers are in a better positon to sell their homes than in years past, tight inventory means they may not be able to find another home to buy, he said.