Los Angeles homeowners are paying nearly three times as much of their income on mortgage payments on average as Americans are nationwide.
A new report by Zillow, first reported by Curbed, found that U.S. homebuyer spends an average of 17.1 percent of their income on mortgage payments. That’s three percentage points lower than what a typical U.S. buyer spent between 1985 and 2000.
Angelenos pay 44.9 percent of their income on mortgage payments, according to Zillow. They paid 34.5 percent of their incomes between 1985-2000 on mortgage payments. L.A. and eight other housing markets of the 35 largest in the country saw increases between those periods.
The price of a home in Southern California hit an all-time high of $520,000 in April and the median price in L.A. County was $50,000 higher than that number.
In the short term however, mortgages are getting more expensive nationwide. The U.S. average of 17.1 percent might seem like a steal compared to L.A.’s 44.9 percent, but the nationwide average is up from 15.9 percent in the fourth quarter 2017.
The nationwide cost peaked at 25.4 percent in 2006 during the height of the bubble. The cost now is approaching the 17.5 percent of income seen in the second quarter of 2009.
Buyers nationwide will be affected by the Federal Reserve’s planned hikes in the benchmark interest rate this year, which drives mortgage rates higher.
While they may end up paying more for a home than they would at a lower point in the market, buyers are moving quickly to lock in a low interest rate before mortgage rates rise. [Curbed] – Dennis Lynch