Housing costs are a greater burden in L.A. than elsewhere

More Angelenos spend a large portion of their income on housing than people anywhere else in the country, according to a new study out Thursday from Harvard University’s Joint Center for Housing Studies.

Fully half of the households in metro Los Angeles spend at least 30% of their income on rent or mortgage payments, the highest rate of 381 metropolitan areas in the U.S. One in four households here spends at least half its income on housing.

The report is the latest evidence of a growing affordability crunch in Southern California’s housing market. Costs to both buy and rent homes have grown far faster than incomes in recent years, pushing more families to spend a greater share of their income to live here.

Seven of the 10 metros with the highest share of “cost-burdened� households are in California, including the Inland Empire, San Diego and Ventura County.

Many economists peg 30% of income as a point at which housing costs start to become burdensome, crowding out other spending. At 50%, it becomes a “severe burden.� Of low-income households that spend at least that much on housing, 39% reported spending less on food and 65% cut spending on healthcare, the report said.

“Pretty much all other necessity spending is getting crowded out,� said Dan McCue, research manager at the Harvard Joint Center for Housing Studies. “Food, clothing, healthcare, you name it. There’s just less to go around.�

Renters are especially squeezed, with 6 in 10 renting households spending at least 30% on housing. Among homeowners in metro Los Angeles, 4 in 10 spend that much, the sixth-highest rate in the country.

The study’s findings echo a report issued in May by the Southern California Assn. of Nonprofit Housing, which found Los Angeles County has a shortfall of nearly 500,000 apartments that are affordable to low-income households. State and local funding for affordable housing has fallen in recent years, even as rents have climbed and demand for low-cost rentals has surged.

In Southern California, the challenge is one both of high housing costs and stagnant wages. Median household income, adjusted for inflation, has fallen 11% here since 2005, while rents have climbed.

And while the typical Southland household still earns more than the national average, incomes here lag behind those of other high-cost housing markets like San Francisco, New York and Washington, D.C. So, despite having less expensive housing than those cities, Los Angeles fares worse on measures of housing affordability.

“The basic cause of these high cost burdens is weak income growth,� McCue said.

More broadly, the Harvard study sees the housing market slowly healing nationwide, in step with the broader economy. But tight credit and high levels of student loan debt are keeping many young adults from buying homes, one of several factors holding back a stronger recovery.

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