California’s major cities were named among the hardest places in the world to buy a home, based on a comparison of home prices and local average incomes by financial services company Remitly.
In its analysis, Remitly found that San Jose, Los Angeles, Long Beach, and San Diego ranked among the five worst cities globally for homebuying conditions. The company said these cities showed heavier home-price burdens than places such as New York, Paris, and Singapore.
According to the report, a one-person household in Los Angeles earning the average annual income of $60,656 could afford a home price equal to only 28.2% of the area’s average home price. In San Jose, the gap was wider: a typical earner making $86,605 could cover housing costs equal to just 27.3% of the area’s average home price.
Remitly said its analysis reflected multiple factors, including home prices, mortgage interest rates, and down payment levels. The countries included were selected from large cities in places previously identified in another survey as preferred destinations for relocation.
Remitly said the findings suggest many residents may need to take on excessive financial burdens, save for a larger down payment, or rely on family financial support to buy a home.
In Long Beach, the report found average income covered only 31.7% of a typical home price. San Diego was similar at 33.3%.
The study also placed two other California Bay Area cities in the top 20. San Francisco ranked 10th, and Oakland ranked 19th. New York ranked 8th at 37.3%, and Miami ranked 9th at 38.5%.
The results were described as showing that California’s home-price burden relative to income is unusually high even by global standards.
A recent report from the California Legislative Analyst’s Office found California home prices were about twice as expensive as the average in mid-priced U.S. cities. As of December last year, California’s average home price was about $755,000, the report said.
Michael Lens, a professor in the Department of Urban Planning and Public Policy at UCLA, said California still has the appeal of a strong job market and a high quality of life, but that housing supply has not kept up enough to meet demand.
Similar findings appeared in a recent housing market update from the California Association of Realtors (CAR). CAR said the statewide median price for single-family homes in the fourth quarter of last year was $869,300, and only 18% of households could afford it.
For Los Angeles, CAR reported a median home price of $939,690. CAR said only 13% of households earned the minimum annual income required—$230,400—to afford that price. In Orange County, the median home price was $1,396,500, and CAR said 14% of households met the purchasing conditions, similar to Los Angeles.
BY HOONSIK WOO [woo.hoonsik@koreadaily.com]
