Economists advise that homebuyers should adhere to the '30% rule', spending no more than 30% of pre-tax income on housing. However, an affordability report by Realtor.com reveals that in high-demand coastal cities, buyers earning median incomes must allocate a staggering 44.6% of their income to afford homes priced around $440,000, well above the recommended threshold. In cities like Los Angeles, median incomes do not translate to home affordability, with many households required to provide eye-watering down payments of 90-95%, leading to lower homeownership rates in these areas.
To meet the 30% affordability benchmark in coastal cities, homebuyers must provide down payments of 80% to 95%, making homeownership increasingly unattainable.
In Los Angeles, despite the median household income being $91,380, high home prices mean most families cannot afford a typical property, requiring 90-95% down.
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