Study: LA’s rate of homeownership is one of the lowest in the nation
In LA, 64 percent of households rent instead of own
In the city of Los Angeles, most residents rent rather than own the homes they live in—and improving economic conditions haven’t done much to change that, according to a new report from Zillow. More than 64 percent of households in the city were occupied by renters in 2016, the most recent year for which the U.S. Census Bureau has released estimates.
Of the 50 largest U.S. cities, Los Angeles has the fourth-highest share of renters, behind only Miami, New York, and Boston. Neighboring Long Beach is fifth on the list, with a 62.3 percent renter rate.
The share of renters in Los Angeles has grown slightly since 2010, when a struggling economy and strict lending requirements prevented many would-be buyers from purchasing homes. At that time, renters occupied 62.4 percent of LA households.
Zillow economist Aaron Terrazas tells Curbed that homeownership rates in LA have not mirrored those of other cities with high housing costs and a lot of renters. In New York, San Francisco, and Boston, the percentage of renters has declined since 2000; in LA, the opposite is true.
Terrazas suggests that wages in the city haven’t kept pace with home prices, which are at an all-time high. With mortgage rates rising, homes are likely to become out of reach for even more prospective buyers. Another factor contributing to LA’s high renter rate may be the meandering boundaries of the city itself. Terrazas points out that many renters who become buyers may purchase homes in nearby cities with cheaper prices, better amenities, or more highly rated schools.
In just LA County, around 54 percent of households were occupied by renters in 2016, suggesting that homeownership rates are significantly higher outside the city of Los Angeles. Still, the share of renters countywide has also gone up since 2000, mirroring a national trend identified in the report.
As the housing market gets more difficult for first-time buyers to navigate, Terrazas says that cities in which renters constitute a majority of residents may simply be the “new normal.”
credit to: Elijah Chiland