Los Angeles Real Estate: Rents in LA Keeps Growing, Making It Unaffordable

Joint Center for Housing Studies (JCHS) of Harvard University released a report last Wednesday, Dec. 9, stating that rents in Los Angeles areas are becoming more unaffordable for tenants.

According to the report, almost 60 percent of renters consumed excessive part of their income just so they can have place to stay. About 58.5 percent of the renters from Los Angeles/Orange County (LA/OC) metro areas are "burdened." This means that they are utilizing over 30 percent of their income for the rent, which may cause them to cut off their other expenses including savings, food and healthcare. This fact, making LA the 22nd least affordable metro in the country, not only hurts the renters but also the local economy. Moreover, 32.8 percent of renters in the same area are said to be "severely burdened" consuming over 50 percent of their income for rent's payment.

Construction of multifamily homes nationwide for almost 30 years has not been enough, not to mention that a lot of those are expensive and luxurious apartments built for professionals earning substantial salaries, says the report.

At the same time, number of renters also escalated because there are families who haven't paid the rent and lost their homes, Los Angeles Times reported. Also, purchasing a home is now becoming more difficult due to the tight standards for lending letting people cling more on rentals. One of the major causes of this problem is the significant decline of income nationwide.

JCHS Managing Director Chris Herbert said, "The crisis in the number of renters paying excessive amounts of their income for housing continues." He added, "The market has been unable to meet the need for housing that is within the financial reach of many families and individuals with lower incomes."

Incomes were adjusted due to inflation and have decreased for about 9 percent since 2001. In contrast, rents have increased for about 7 percent. And now, about 50 percent of U.S. renters consumed almost one-third of their income for rents, attaining a record of 21.3 million, a large increase compared to 2001's 14.8 million where only 41 percent of renters consumed that much.