Living in Los Angeles, homebuyers and renters know too well the challenges of finding housing that fits their budgets. But how does their city stack up next to others around the country?
Very poorly, according to a new report from Harvard University's Joint Center for Housing Studies out Friday.
Home prices in L.A. have risen 97 percent since 2000, with the median home price standing at $594,0000. That's put home ownership out of reach for most, with just a quarter of households able to afford a median-priced home in the area, the report found.
The picture is even more dire for households that rent: Only 12 percent of renters can purchase a home, despite historically low interest rates. It's only tougher for prospective homebuyers in metropolitan Honolulu and San Jose.
But in most other cities, the majority of households have the means to buy homes. In St. Louis, for example, 72 percent of households could afford the monthly median payments on a home.
Given L.A.'s housing prices, it's no surprise that it has the lowest share of homeowners among the nation's 50 largest metros at 47.9 percent. That compares to 69.2 percent in Pittsburgh, as an example.
The consensus among real estate experts is that Los Angeles, like much of California, is not building enough new homes to keep pace with a growing population.
Even though Los Angeles is the nation's second-largest city, the Harvard study found it had the fifth highest-rate of construction last year. Los Angeles generated 32,100 building permits, lagging behind Dallas (55,800), Houston (44,700), New York (43,200) and Atlanta (36,400).
The undersupply of housing has spurred on rapid home value appreciation since the recession, with prices in the Los Angeles area — and most of the state — rising more than 40 percent since 2000.
The report said a big problem is the "mismatch of demand and supply with the number of low-income renters far outstripping the number of available units at the lowest end of the market."
Los Angeles is short more than 500,000 units that low-income renters could afford, according to the report.
That often leaves renters in housing that breaks the wallet. The Harvard report found that 57 percent of L.A. renters devoted roughly a third or more of their paycheck to rent in 2015, making them among the most "cost-burdened" in the country.
Financial experts often advise that renters spend no more than 25 percent to 30 percent of their income on housing.