There are many reasons for the high housing costs in Los Angeles — a short supply of new homes and apartments, continued population growth, stagnating wages, and high land prices — just to name a few. All these factors have combined to create a severe housing affordability crisis in Los Angeles.
Short Supply. Los Angeles has a critical shortage of housing. During the 1990s, only one new home or apartment was built for every two new families. This lack of supply has led to increasing rents and home prices as the region continues to grow.
» See how much housing was built in the last decade
Growing Demand. The population in Los Angeles is expected to increase by 30 percent by 2030, with much of the growth attributable to young families with children. The region's growing population means that the demand for housing will continue to increase — exacerbating the problem of a tight housing supply and driving prices even higher.
» How much housing is needed to accommodate projected growth?
Wages vs. Housing Costs. While the cost of housing has continued to increase in Los Angeles, incomes have not risen in response — especially for low wage workers. The income of many renters, who make up more than 60 percent of the people in Los Angeles, has actually fallen over the past several years. This makes the cost of housing a growing burden for many people.
» Learn how much someone needs to earn to afford a place to live
Economics of Real Estate Development. The high cost of land, materials and labor in Southern California means that the rents and sales prices for newly built apartments and homes are completely out of reach for most residents. Private real estate developers only build new housing when rents and home prices are high enough to cover land and construction costs and still make a profit. In the mid-1990s, when rents were more affordable, virtually no new housing was built — which has contributed to the current housing shortage. The role of ensuring that new development is more affordable to a larger share of residents ultimately falls to local, state and federal governments who fashion planning and housing policies.
» Learn about how new housing gets built — step by step
Lack of Family-Sized Apartments. Another contributing factor to the housing crisis is the lack of family sized apartments — two, three and four bedroom homes that can accommodate families with children. While close to half of all households in Los Angeles have three or more people, nearly two thirds of the apartments in the city have one or fewer bedrooms. This mismatch adds to the severe overcrowding problems caused by high rents and home prices.
» Compare family sizes to apartment sizes in Los Angeles
