The median price of a single-family home in California hit another record last month: nearly $828,000. In LA, you’re likely paying a lot more than that. The pandemic pushed people toward home ownership, which made the million-dollar home the norm. That money won’t buy you a big house either.
How are so many people affording $1 million homes — when the median income in LA County is around $68,000? The LA Times has a big story about who these buyers are.
LA Times reporter Andrew Khouri says he talked to several first-time buyers in their 20s and 30s who each have jobs paying $100,000 to $120,000 per year. They work in tech and engineering, and many are dual-income couples who make some $200,000 together.
He notes that various people are getting help from family members, cashing in on cryptocurrency/stock market investments, and have built large savings accounts.
When it comes to generational wealth that allows people to buy homes, Khouri says, “If you look at the homeownership rate in the country whose parents were homeowners, have built equity, have the ability to pass wealth to their children, this would be more predominantly white households.”
What kind of real estate does $1 million get you in LA? Khouri says he talked to one person who bought a two-bedroom/one-bathroom house in Echo Park. He also looked at data showing the median size for a $1 million home in the City of LA: 1,500 square feet of living space, three bedrooms, and two bathrooms on a 5,500 square-foot lot.
Will prices eventually drop? Khouri says economists and researchers believe that people who are buying these homes can afford them, so there’s little concern that all of a sudden, lots of people will no longer be able to pay their mortgages and thus go into foreclosure. The market won’t be flooded with cheap foreclosures.
“Maybe there’s a risk going forward of prices coming down. At least at the moment, no one’s raising huge concerns about a massive bubble popping,” says Khouri.