HOW LONG DO YOU HAVE TO SAVE TO BUY REAL ESTATE IN L.A.?
January 21, 2013 on 2:05 pm | In Charts + Statistics, Curious, Fascinating Information, For Your Purchasing Pleasure, fUNNY...mONEY, Investment Opportunities, WOW | 2 Commentsby Jodi Summers
People in Los Angeles are going to be renting for a long time. Did you ever calculate how long you have to work and save in order to afford a home? If you did, you understand why everybody’s renting. Here’s a nifty little chart courtesy of The Atlantic Cities to help you calculate the numbers.
Enjoy figuring out how many years it takes to save enough for a down payment in Los Angeles or any of the 100 largest U.S. metro areas. The statistics come from factoring in local average wages from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages as well as local housing prices based on the median asking price per square foot of homes listed on Trulia.
The study estimated that people saving for a down payment set aside 10% of their pre-tax earnings and will earn an annual return of 1.5% on those savings. They assumed a 20% down payment, the minimum you can put down without paying insurance on your mortgage.
Notice that affordability varies hugely across metro areas. Sure, individuals have the potential to earn more money in most metros with higher housing costs – but those high wages usually aren’t high enough to offset the even higher housing costs. Among large metros, average weekly wages range from $655 in El Paso to $1809 in San Jose – almost three times as much. But median price per square foot runs from just $46 in Detroit to $459 in San Francisco – nearly ten times as high.
As you can see from the table below, in Los Angeles County, you’ll need to work 15.5 years in order to save enough for a 20% down payment on a typical 2,000 square-foot home costing $236 per square foot….It takes even longer in Orange and Ventura Counties….not to mention Santa Monica, were last month the average sale price is $660.38 per square foot for single family homes and condos combined. So, how long does it take to buy a home in the L.A. area? You do the math.
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http://pro.themls.com/membersonly/All_Searches/reports_action.cfm
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The nation’s homeownership rate is the lowest in 50 years, estimated at 62.1 percent, as reported by the Examiner. With 3.8 million homeowners 90 days or more delinquent on their mortgage payments and a wavering single-family housing market, long-term renting appears a much more viable solution to deal with the economic uncertainties that affected the residential real estate during the recession.
The overall U.S. apartment sector gained considerable momentum in the first two quarters of 2012, spurred by an increased demand of urban living and a shortage of new residential development. The improved multifamily market conditions allowed landlords to raise rents and continue on a path of steady recovery, though at a slower pace than earlier this year.
Comment by AmaliaOtet — January 24, 2013 #
I’m still saving.
Comment by JBol — January 26, 2013 #