Los Angeles has won the dubious distinction of being the most unaffordable city in America.
A report from Creditnews Research found that a married couple earning the median income of $117,056 in Los Angeles cannot afford an average home in any neighborhood in the city.
“Affordable” was defined as a monthly mortgage payment (interest and principal) that is no more than 25% of gross income.
With the average rate on a 30-year fixed mortgage above 7.5% last October, Redfin reported that the typical US homebuyer’s monthly mortgage payment had risen to an all-time high of $2,866.
In unaffordable Los Angeles, the typical monthly mortgage payment was $5,932.
The annual income needed to afford a median-home priced home was $237,281.
It was better in New York City, where Redfin found that an income of $197,734 was enough to afford a typical home.
In Houston, an average home was affordable on an income of $92,185, while a family earning $143,187 could comfortably afford to buy a house in Miami, Florida, where the median home price was $525,000.
What’s going on in Los Angeles?
Part of the problem is California’s policy of discouraging the construction of single-family homes.
In their quixotic pursuit of global climate leadership, state lawmakers passed Senate Bill 743 in 2013 to designate “vehicle miles traveled” as an “impact” on the environment under the 1970 California Environmental Quality Act.
In practice, this “impact” means it’s virtually impossible to build homes in outlying areas, where land is more affordable.
The premise of SB 743 is this: more homeowners means more commuters driving long distances to work, and because transportation is the state’s largest source of greenhouse gas emissions, commuting homeowners cause climate change.
In fact, this is blithering idiocy, because the entire state of California produces only about 1% of the planet’s greenhouse gasses.
Even if the entire state vanished, the impact on the global climate would be negligible.
It is utterly senseless to limit home construction simply to prevent California homeowners from driving to work.
Yet that’s exactly what’s happening. According to the US Census Bureau, which tracks residential building permits by state, in 2023 there were 149,860 permits for the construction of single-family residences issued in Texas and 125,773 in Florida. In California, only 58,534.
Housing prices are determined by supply and demand, and if new households are forming but housing is not built to accommodate them, the result is skyrocketing home prices and a generation of young families that are not living as well as their parents did.
California politicians’ grandiose obsession with “leading” on climate — Gov. Gavin Newsom was at the Vatican this week to offer his advice to the world — is directly responsible for making Los Angeles, and the rest of the state, unaffordable.
For more than a decade, state law has required utilities to comply with a Renewables Portfolio Standard, a mandate for an ever-increasing percentage of retail electricity sales to be generated by renewable energy.
Sacramento defines this as solar, wind, geothermal, biomass, biogas and small hydroelectric plants that produce less than 30 megawatts.
But California actually relies on electricity from large hydroelectric plants, one nuclear plant, aging gas-powered generating facilities and electricity imported from other states, because “renewables” are not adequate to meet the state’s needs, not even close.
This costly, duplicative power purchasing has given California households electricity rates that are double the national average.
According to the latest report from the Public Advocates Office of the California Public Utilities Commission, in the decade ending March 2024, residential electricity rates were up 82% for customers of San Diego Gas & Electric, 93% for customers of Southern California Edison, and 128% for customers of Pacific Gas & Electric.
Another climate policy contributing to the lack of affordability is the “Low Carbon Fuel Standard,” a regulatory system established by the 2006 “Global Warming Solutions Act.”
The latest update to the regulations has been projected to add almost 50 cents per gallon to the price of gasoline to meet climate targets.
Californians already pay roughly $2 per gallon more than the national average.
The quickest path to affordability in California would be to repeal its useless, restrictive climate laws. More families would be able to buy homes — they might even have enough left to keep the lights on.
https://nypost.com/2024/05/18/opinion/los-angeles-has-the-most-unaffordable-housing-in-the-us/
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