The cost of housing in Los Angeles is the highest in the United States.
Los Angeles has earned the title of the most unaffordable city in America.
A recent report from Creditnews Research revealed that a married couple with a median income of $117,056 in Los Angeles cannot afford an average home in any neighborhood in the city. In this context, “affordable” means a monthly mortgage payment that is no more than 25% of gross income.
With the average rate on a 30-year fixed mortgage exceeding 7.5% last October, Redfin reported that the typical US homebuyer’s monthly mortgage payment had reached an all-time high of $2,866.
In unaffordable Los Angeles, the typical monthly mortgage payment stood at $5,932.
The annual income required to afford a median-priced home was $237,281.
The situation was slightly better in New York City, where an income of $197,734 was sufficient to afford a typical home.
In Houston, an average home was within reach on an income of $92,185, while in Miami, Florida, a family earning $143,187 could comfortably afford to purchase a house, with the median home price set at $525,000.
What’s causing this affordability crisis in Los Angeles?
Part of the issue lies with California’s discouraging policy towards the construction of single-family homes.
In their quest for global climate leadership, state lawmakers passed Senate Bill 743 in 2013, which categorized “vehicle miles traveled” as an environmental impact under the California Environmental Quality Act of 1970.
In practice, this impact makes it nearly impossible to construct homes in more affordable outlying areas. The premise of SB 743 is that more homeowners lead to more commuters driving long distances to work, resulting in increased greenhouse gas emissions from transportation. However, California’s emissions account for only about 1% of global emissions, making this restriction on home construction senseless.
Despite this, restrictions are increasing. According to the US Census Bureau, Texas issued 149,860 permits for single-family residences in 2023, Florida issued 125,773, while California issued only 58,534. This imbalance in supply and demand is driving up housing prices and making it harder for young families to achieve the same standard of living as their parents.
The state’s obsession with climate action is directly contributing to the unaffordability of Los Angeles and the rest of California.
For over a decade, California has enforced a Renewables Portfolio Standard, requiring increasing percentages of retail electricity sales to come from renewable sources. However, the state relies on a combination of renewable and non-renewable energy sources due to the inadequacy of renewables. This costly approach has led to electricity rates in California being double the national average.
According to a recent report from the Public Advocates Office of the California Public Utilities Commission, residential electricity rates rose significantly in the last decade for customers of major utilities in the state.
Another policy, the “Low Carbon Fuel Standard,” established by the 2006 “Global Warming Solutions Act,” is projected to increase gasoline prices in California by nearly 50 cents per gallon to meet climate targets. Californians already pay around $2 more per gallon than the national average.
The most direct path to affordability in California would be to repeal restrictive climate laws. This would enable more families to afford homes and potentially have extra funds for basic living expenses.
Susan Shelley is a columnist for the Southern California News Group and VP of Communications for the Howard Jarvis Taxpayers Association. Follow her on Twitter: @Susan_Shelley
