By Andre Jones
Through various studies, we’ve learned that the cost of rent is rising nationwide and Los Angeles, California is no exception. A recent study has found that in order to rent a two-bedroom apartment in L.A., the average person pretty much has to be rich.
According to LA Weekly, personal finance technology company SmartAsset has concluded that it takes an annual income of at least $109, 543 to afford what is being called an “average” two-bedroom apartment in the city of L.A. According to RentCafe, this turns out to be around $2,556 – a 5 percent increase from the average rental cost for the same dwelling the previous year.
If you can afford this exorbitant rent, this would place you in the top 20 percent of earners nationwide. SmartAssets vice president of financial education weighed in, “Los Angeles is one of those areas that require high income,” she told LA Weekly. If you’re planning to move to Los Angeles, the question she wants you to ask yourself is, “Are you getting enough income to support rent?”
The new report assumes that whether a person rents or owns, they should be spending 30 percent or less of their total net income on housing. This meets the established federal threshold for being “cost-burdened” assuming that the percentage of income used for housing does not encroach on the nondiscretionary income that is left. “Many big cities require surprisingly large incomes to stay under that percentage,” a SmartAsset spokeswoman reported via email.
In 2015, a Harvard study concluded that a full 33 percent of renters in L.A. and Orange counties fall well outside of this percentage, shelling out over half of their income for housing. SmartAsset discovered that out of the 15 cities nationwide where renters need a six-figure income to rent an average two-bedroom, 10 of them were located in California alone.
Cities like Atlanta, Dallas, and Houston have considerably lower income requirements for renters who want to stay unburdened, with the median income required to rent a two-bedroom apartment averaging $53,914, $51,600, and $46,629, respectively. Though L.A. ranks fourth behind San Francisco, New York, and Boston in terms of income required to stay unburdened, it does not take into consideration L.A.’s comparatively meager median earnings (around $28,000 annually), which ends up making L.A.’s housing problem the worst in the nation.
Larry Gross, executive director for the Coalition for Economic Survival had this to say, “Los Angeles renters are extremely burdened and are having a difficult time making ends meet,” he told LA Weekly, “There are not enough hours in the day for most people to earn enough money to afford an average apartment here.”