Everyone has their own definition of rich. Living in an average, two-bedroom apartment in Los Angeles probably doesn't figure in anyone's approximation of contemporary wealth. Yet technically speaking, those who can afford such accommodation are wealthy.
A new analysis from personal finance technology company SmartAsset concludes that it takes $109,543 in annual income to afford an "average" ($2,556 per month) two-bedroom apartment in the city of Los Angeles. The housing data was culled from RentCafe. That kind of household income would place renters in the top 20 percent of earners nationally.
"Los Angeles is one of those areas that require high income," says A.J. Smith, SmartAssets vice president of financial education. She wants prospective Angelenos to ask themselves, "Are you getting enough income to support rent?"
The report assumes that folks should spend 30 percent or less of their income on housing. That's the federal threshold for being "cost-burdened," with that slice of income being "the amount of income that a family could spend and still have enough left over for other nondiscretionary spending," according to the U.S. Census Bureau. "Many big cities require surprisingly large incomes to stay under that percentage," a SmartAsset spokeswoman said via email.
"Los Angeles renters are extremely burdened and are having a difficult time making ends meet," says Larry Gross, executive director for the Coalition for Economic Survival. "Because of rents, people are forced to double up and triple up with roommates."
In 2015, Harvard found that one-third of renters in L.A. and Orange counties pay half or more of their income for housing. And SmartAsset found that 10 of the 15 cities across the nation where renters need a six-figure income to rent an average two-bedroom apartment are in California.
There are relative discounts to be found, but they're away from the coast. Riverside requires only $61,329 in household income to rent an average two-bedroom apartment ($1,431). And Atlanta ($53,914), Dallas ($51,600) and Houston ($46,629) have much lower income requirements for renters who want to stay unburdened, according to the analysis.
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In terms of income required to avoid that burden, Los Angeles ranked fourth nationally behind San Francisco, New York and Boston. However, the analysis didn't take into account L.A.'s relatively low earnings (the median individual income here is about $28,000), which arguably makes housing here the toughest in the nation.
"There are not enough hours in the day for most people to earn enough money to afford an average apartment here," Gross says.