California Today: ‘Sticker Shock’ in Los Angeles Housing

Development in downtown Los Angeles, where high rents have led many to flee for the suburbs.CreditMonica Almeida/The New York Times

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Let’s turn it over to Jennifer Medina, a national correspondent based in Los Angeles.

What does it take to be middle class in Los Angeles?

That was the question Ross DeVol started out asking himself when he began calculating how much a resident would need to make to spend 30 percent of earned after-tax income on rent for a two-bedroom apartment in Los Angeles County.

The answer: a whopping $145,000.

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“It really challenges what we think of what we speak of the middle income family,” said Mr. DeVol, a researcher with the Milken Institute, a Santa Monica-based think tank. “It significantly changes the requirements for living a middle-class life here.”

To arrive at the figure, Mr. DeVol used median rents in the county, with a two-bedroom landing at roughly $2,000, a figure that varies greatly, of course, on the exact location. (A two-bedroom in Santa Monica, for example, is far higher than a two-bedroom in Glendale.) Mr. DeVol then looked at tax brackets to arrive at his conclusion.

It’s not simply a matter of complaining about the rent being too high, Mr. DeVol explained. It presents a challenge to the economy, forcing many would-be Angelenos out of the city and into the surrounding suburbs or even out of state.

The problem stems in part from the fact that more jobs have been created in the city than new housing. And though Los Angeles has not yet reached San Francisco-sized rents, economists like Mr. DeVol worry that it will stop the city from growing.

“It becomes a real challenge for companies recruiting people,” he said, invoking his own experience in trying to get new employees. “There’s a real sticker shock in getting them to come here. What we think of as approaching the middle class barely gets you there here.”

The median income in the county is roughly $45,000, Mr. DeVol said. And by some estimates people spend an average of half their income on rent today, he added.

“I really fear losing a big chunk of families and an economy that is vibrant enough to sustain it in the future,” Mr. DeVol said.

Courtesy of nytimes.com by Mike McPhate

What’s your experience of rising rents in the region? How much of your paycheck goes to rent or mortgage? How have you dealt with the climbing costs of housing? Share your story with us: CAtoday@nytimes.com.