Region : Home Affordability Studied

A staggering 92% of Westside homeowners couldn’t afford the payments on the homes they live in if they had to purchase those same homes at today’s prices, according to a survey released this week by Price Waterhouse Real Estate Consulting Group.

The survey, which compares average annual incomes to current median home prices in 17 Westside communities, found that only 8% of current homeowners could afford the payments on a standard 80% mortgage at current prices. Nationally, affordability stands at 46%; in California it is 17%.

“The run-up in home prices during the last three years has pushed affordability on the Westside to an all-time low,” said Daniel S. Levitan, Price Waterhouse’s director of real estate consulting for Los Angeles County. “Barring a major real estate recession, the Westside is likely to become even less affordable during the 1990s.”

Of the 17 communities surveyed, only three had affordability indexes above 20%: Playa del Rey at 41.3%, Baldwin Hills at 21.6% and Bel-Air at 20.1%

Venice, meanwhile, had the lowest affordability range with just 2.2% of current residents able to afford the median-priced home there. Levitan, however, attributed some of those findings to the number of renters and the lower average household income for the area.

The study recommends that two public-policy issues be pursued to help ease the Westside’s housing crisis: shorten the review and approval process for development of public facilities, and accept high-density development, including high-rise residential housing.

“The American dream of single-family homeownership is largely out of reach on the Westside, and that is a situation that will not change,” said Levitan, adding that within the next five years the percentage of households able to purchase the median-priced home will drop to below 5%. “What the citizens and their elected leaders in Los Angeles must realize is that a vertical city can be just as livable as one that is horizontal.”