LOS ANGELES - California is an expensive place - this we know.
With that being said, inflation and the current state of the economy aren't helping either, driving the cost of land and building materials higher than ever.
It isn't the best news for people looking to purchase a starter home.
It's so bad especially in the real estate world, where after the latest mortgage rate hike, renters in 46 of the 50 largest U.S. cities can no longer afford a starter home, according to a recent study by Point2Home.
The real estate website analyzed data on the median price of a starer home and renters' households' median income to estimate the impact of the latest rate increases on affordability.
They discovered that renters’ homeownership dreams don’t align with the reality in nearly any of the large U.S. housing markets.
In those cities, workers earn less than 40% of the income needed to cover the monthly mortgage rate of a starter home.
Renters in Los Angeles earn close to $50,000 on average, according to the data, while the income required to afford a mortgage is nearly $167,000. This means they are $117,369 short of what's needed to buy an entry-level home.
It's as little better in Long Beach and Oakland, where workers earn more than $50,000 on average. The income in these two cities required to afford a mortgage is between $140,000 and $150,000 which means prospective buyers in these cities make $90,000 less than what they need to afford a starter home.
The study also found San Francisco costs more than all the median-entry level homes in the top 10 most affordable cities combined. Here, the average renter household made $100,715, but the amount a first-time buyer would need to comfortably cover mortgage payments was $251,190. This means that San Francisco renters are $150,475 (or 60%) short of making their homeownership dreams a reality.
Nationwide, the study found that renters in only four large U.S. cities earned 100% or more than what they needed to afford an entry-level home. Those cities are Detroit, Michigan; Tulsa, Oklahoma; Memphis, Tennessee; and Oklahoma City, Oklahoma.
To see the full study, tap or click here.