Most Los Angeles Apartments Require More Than The Annual Median Income To Rent
Anyone looking for a home or renting an apartment knows it is nearly impossible to find something that you can afford and also love. The cost of living has been consistently rising and even with recent efforts and attention towards increasing the minimum wage, it’s just plain difficult to meet the minimum income requirements to buy or rent a home.
According to the most recent Census’ American Community Survey, median annual household income for Los Angeles County is $59,134. This means that 50% of the Los Angeles population is making more than this, but also 50% is making less. If you’ve been wondering where you can afford to live, RentHop’s data science team has done the math for you.
The 40x Rule
To calculate what is and isn’t affordable, we used the 40x rule. This is the rule of thumb for most landlords in pretty much every major city. This guideline says that the household income must be at least 40 times the monthly rent. For example: we found that the median rent for a two-bedroom in Los Angeles is $2,480 per month, and will require $99,200 ($2,480 x 40) to secure. That’s about 168% of the LA median household income. With $59,134 a family could afford rent of just $1,478 per month; just a handful of LA neighborhoods.
There are exceptions to this rule: If you have vast savings or a guarantor whom makes 80 times the rent, a landlord is likely to let you slide without meeting the income requirements. It’s also not unheard of for a landlord to request last month’s rent in addition to the first month and security deposit for those with below average credit / income. Our “how much can I afford” guide can give you a little more info on these rules and some ways to overcome them.
So how much DO you need in order to live in a Los Angeles neighborhood?
The Map Below Shows Income Required for a 2-Bedroom Apartment in Los Angeles
The map above shows the cost of a two-bedroom in neighborhoods across Los Angeles County. We used our rental data for the past 6 months as of June 1, 2017 to calculated the median asking rent and multiplied that by 40 to calculate the customary income requirement to rent an apartment. Median household income is according to the Census American Community Survey 2015, table S1903.
This could lead you to believe that no one can afford to live in Los Angeles, but as we know, many people make significantly more than the median income, many other are retired and own their homes, and certainly many people have been locked in rent at a much lower rate years ago. This map and data represents a current market snapshot and what it costs to find a new apartment today.
What Are the Least Affordable Places to Live in Los Angeles?
It should come as no surprise that the most expensive neighborhoods to rent an apartment were near the coast in Malibu, Santa Monica, Pacific Palisades, all the way down to Hermosa Beach. Sections of Malibu took the top 3 spots on our list, with Eastern Malibu topping it all with median rent of $6,500 per month, requiring $260,000 per year in household income.
Bel-Air made a three-way tie with Central and Western Malibu for the number 2 spot where median two-bedroom rent is $5,500 and income of $220,000 is required. Pacific Palisades rounded out the top 5 with rent of $5,275 – 356% of what the median income could afford.
The Table Below Displays All Two-Bedroom Median Asking Rents
It also shows the income required to live there for all neighborhoods that we had sufficient data. Click any column name to sort by that column, or type in a neighborhood name to search for yours.
Is There Anywhere in LA That is Actually Affordable?
If you click “Income Required” to re-sort the table above it’ll show that stat in ascending order. This shows us Maywood and East Compton at the top of the list of cheapest/affordable neighborhoods. Neighborhoods in south LA and far north LA were significantly less expensive than Central and Western LA. Southeast Wrigley, Lynwood, and Cudahy also ranked in the top 10 affordable neighborhoods.
The table can also be sorted alphabetically or searched using the name of the neighborhood you’d like to look up. If your neighborhood isn’t found, we may not have data for it.
Central Long Beach earns an honorable mention with two-bedroom median rent of just $1,450, slipping right under the Census median income rent statistic. Compton was right on the money at $1,495, and many will find their landlord is somewhat lenient if you’re within a few dollars of the 40x rule figure.
What Does This Mean For You?
While these stats aren’t the be all and end all of the housing market, they definitely paint a picture of what to expect when hunting for your next home. We encourage you to entertain all options when finding a new apartment, including having as many income-earners in the household as possible and looking at apartments with more bedrooms to bring down the average cost per bedroom.
