Los Angeles Earns 'F' for Housing Affordability and Building in New Report
The metro area ranks last among the nation's 100 largest for home affordability and construction, with typical home prices more than 12 times median household income.
Los Angeles has been ranked the worst major metropolitan area in the United States for housing affordability and homebuilding, according to a new report card from Realtor.com. The Los Angeles-Long Beach metro area received an overall "F" grade, scoring the lowest among the 100 largest U.S. metropolitan areas.
The report evaluated metros based on a combination of affordability and homebuilding measures, weighted equally. Los Angeles achieved an overall score of just 12 out of 100, with a particularly low affordability score of 0.9 and a homebuilding score of 23.1. Any metro area scoring 30 or below was given an "F."
High housing costs and stagnant income contribute to the region's affordability crisis. The typical home in the Los Angeles area is listed for $1,129,415. However, the median household income is $91,380 annually. For a median earner attempting to purchase the typical home with a 10% down payment and a 6.5% mortgage rate, the monthly payment would consume approximately 84.4% of their income. This figure significantly exceeds the widely accepted benchmark of 30% for housing affordability.
To bring the monthly mortgage payment down to the 30% affordability threshold, a buyer would need to make a down payment of about $768,000, representing 68% of the home's price.
"Put simply, a monthly mortgage payment on the typical home in LA is not affordable to typical income-earners," said Joel Berner, Senior Economist at Realtor.com.
The region is also struggling with home construction. Los Angeles posted a permit-to-population ratio of just 0.47, indicating that fewer than half as many homes are being permitted per resident compared to the national average. This suggests that supply-side solutions to alleviate price pressures are not imminent.
Several other California metropolitan areas also received failing grades, with Oxnard-Thousand Oaks-Ventura ranking 95th, San Francisco-Oakland at 94th, San Diego at 92nd, Stockton-Lodi at 91st, and San Jose at 90th, all receiving "F" grades. Riverside, though scoring slightly higher at 29.9 overall, also failed, but showed a relatively stronger homebuilding score of 50.5.
In total, seven of the 13 metropolitan areas that received an "F" were located in California. Other metros with failing grades include Providence, Rhode Island; New York-Newark; Honolulu, Hawaii; Boston, Massachusetts; Worcester, Massachusetts; and Miami-Fort Lauderdale.
In contrast, Des Moines, Iowa, topped the report card, excelling in both affordability and homebuilding metrics.