Here’s How Much More You Have to Be Making to Afford a House, Millennials from Les and Elaine

Elaine Golden Gealer, Brentwood condos, Brentwood townhomes, Brentwood real estate, Brentwood new construction, Brentwood condominiums, Westwood condos, Westwood townhomes, Westwood real estate, Westwood new construction, Westwood condominiums, Westchester condos, Westchester townhomes, Westchester real estate, Westchester construction, Westchester condominiums, Toluca Lake condos, Toluca Lake townhomes, Toluca Lake real estate, Toluca Lake construction, Toluca Lake condominiums, North Hollywood condos, North Hollywood townhomes, North Hollywood real estate, North Hollywood new construction, North Hollywood condominiums, Sherman Oaks condos, Sherman Oaks townhomes, Sherman Oaks real estate, Sherman Oaks new construction, Sherman Oaks condominiums, Encino condos, Encino townhomes, Encino real estate, Encino new construction, Encino condominiums, Beverly Hills condos, Beverly Hills townhomes, Beverly Hills real estate, Beverly Hills new construction, Beverly Hills condominiums, West Los Angeles condos, West Los Angeles townhomes, West Los Angeles real estate, West Los Angeles new construction, West Los Angeles condominiums, West Hollywood condos, West Hollywood townhomes, West Hollywood real estate, West Hollywood new construction, West Hollywood condominiums, Santa Monica condos, Santa Monica townhomes, Santa Monica, real estate, Santa Monica new construction, Santa Monica condominiums, San Fernando Valley condos, San Fernando Valley townhomes, San Fernando Valley real estate, San Fernando Valley new construction, San Fernando Valley condominiums.We already know that the gap between wages and rents in Los Angeles is huge, but let’s not forget about the chasm dividing wages and the cost of homeownership. Bloomberg takes a look at how that chasm hits Millennials—here defined as people between 18 and 33—in the LA metro area and finds that there is a $45,761 difference between the amount that a person would need to make a year in order to buy a median-priced home, and the average median income for people of that age in Los Angeles. That’s a huge divide, and it’s probably even bigger when considering the pesky issue of making a down payment.

Based on 2013 Census information for median income, and assuming “an escalation of 2 percent per year” (which is probably generous), the median income for Millennials in LA is $35,027. Mortgage payments are calculated assuming a 20-percent down payment and a 30-year fixed mortgage. The median home value—calculated using Zillow information from the first four months of this year and accounting for single-family, detached houses—is $560,175. Bloomberg finds that, in order to buy that house, a Millennial would need to be making $80,788, which is more than double the median income for their age group.

And the kicker is that Bloomberg is assuming that these young people have even managed to save up the money for that down payment, which is wishful thinking to say the least. “Families where the head of household was under 35 years old had a median net worth of $10,400 in 2013, according to the Federal Reserve’s Survey of Consumer Finances.” So instead of putting money toward something they might eventually own, Millennials probably just end up paying more rent.

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Elaine                                                     
DRE #00598428
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed

310.453.1965 Cell: 310.633.4742  Fax: 310.756.1233

elaine@elaine360.com

“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”

 

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