Housing Affordability Index
Less than a third of households in Los Angeles County could afford to buy a median-priced home in the region since the third quarter of 2013. Housing affordability remains a challenge throughout California, with only a slightly larger percentage with the ability to purchase a median-priced home in the state. Although the affordability gap between Los Angeles County and California seemed to close every second quarter of each year since 2013, the overall trend indicates that housing in Los Angeles County would most likely remain less affordable than the state as a whole.
Why is housing in California so expensive?
Economists generally agree that the root cause of California’s housing woes is due to low supply and high demand. Particularly, population growth has outpaced the number of housing units available. Economists cite strict development restrictions as the main culprit of low housing supply (Los Angeles Times, September 2018). As California’s most populous county, Los Angeles faces the greatest housing needs, followed by Santa Clara, Alameda, and Orange Counties (CA Legislative Analyst’s Office, March 2015).
The problem of inadequate number of housing units does not only affect home ownership but also drives up rent and homelessness (Los Angeles Times, March 2018).
What is Traditional Housing Affordability Index?
“Traditional Housing Affordability Index (HAI) measures the percentage of households that can afford to purchase the median priced home in the state and regions of California based on traditional assumptions. The HAI is the most fundamental measure of housing well-being for buyers in the state” (CA Association of Realtors, n.d.).