Nearly a third of Los Angeles County renters spend half or more of their income on housing, according to a new analysis from Apartment List.
This is one step beyond "cost-burdened," a term defined by the federal government in 1937 as "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. The analysis found that about 32 percent of renters (in a region where renters make up the majority of households) are "severely cost-burdened."
A whopping 58 percent of L.A. and Orange County renters are either cost-burdened or severely cost-burdened.
"If you're spending 50 percent, you have to be giving up something else," says Sydney Bennet, a senior research associate at Apartment List. "Maybe you have to take the bus for hours to and from work because you can't afford a car. Maybe you put off buying new clothes. These are people struggling to get by and risk eviction."
It's not good for the area's economy, either. It means retail is suffering and employers could have a hard time attracting workers, particularly those in the working and middle classes, including service industry employees, Bennet says. One out of 10 private-sector jobs in L.A. County is in the service industry.
"L.A. has a good job market for knowledge workers in Hollywood and tech," Bennet says. "But this is bad if you're trying to attract people to work in the service industry."
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The region's affordability problem has been exacerbated by what the analysis found was a nearly 18 percent rise in rents in Los Angeles and Orange counties since 2005. Blue-collar income during that time has decreased nearly 3 percent; service-worker income took a 9.4 percent dive.
The squeeze is likely putting some families on the street. Some folks are moving to the exurbs for relief. Bennet says there's some evidence that Angelenos are relocating to Riverside, which has plentiful housing stock due to the real estate meltdown and the Great Recession.
The crisis also means that people who could own homes if they lived elsewhere are renting in Los Angeles, which increases competition for housing and drives up lease rates, Bennet says.
But Greater Los Angeles wasn't the worst place for renters, according to the analysis. Miami, where 63 percent of renters were cost-burdened or severely cost-burdened, took the top spot. It was followed by Fresno, Oxnard, Riverside, Honolulu, Greater L.A., San Diego, New Orleans and Bridgeport, Conn.