32-year-old gave up on buying a home in LA after mortgage costs surged: ‘Even a modest condo costs close to $1 million'

When Jonathan Ochart moved from San Antonio to Los Angeles in 2023 to grow his public relations business, he figured he'd buy a condo.

"One bedroom, 600 to 700 square feet, nothing fancy," he tells CNBC Make It.

Ochart was already a homeowner, having purchased a detached, two-bedroom house in San Antonio for roughly $275,000 in 2021, which he now rents out. By keeping the Texas property, Ochart can't rely on proceeds from a sale to put toward another home. But that's only one of the reasons he's priced out of the Los Angeles County market, even for a smaller place.

In LA, "even a modest condo costs close to $1 million," he says.

Listings within Ochart's $450,000 budget came with significant trade-offs — either they were located far from his preferred neighborhoods, required extensive renovations or had steep homeowners association fees due to special assessments for repairs.

By early 2024, Ochart had given up on the idea of buying a condo in Los Angeles altogether. With mortgage rates hovering near 8% at that time, his monthly payments would have been between $3,500 and $4,000 — far beyond what he felt comfortable spending.

Considering the cost, he figured "if you don't love the space, and you don't love the neighborhood, it just doesn't make sense to spend all that money that you've worked so hard to save."

Instead, Ochart found a one-bedroom rental in Beverly Hills for $2,100 per month. "I pay half the amount renting here that I would buy in a place," he says. "So it just makes more sense to rent." 

Ochart's situation is typical of many young professionals who aim to buy homes in major metro areas. While large cities offer career opportunities, higher salaries and diverse lifestyle options, high housing costs have made homeownership unaffordable.

As a result, many like Ochart are left choosing between renting or relocating to more affordable areas, often far from their jobs.

Homes in big U.S. cities only seem affordable to the wealthiest Americans

In large urban hubs like LA, San Jose, New York and Boston, median-priced homes sell closer to $1 million than to the national median of $412,300. In LA County, the median home price sits just under $960,000 — roughly 14 times the median annual household income for the county, according to the latest data from the U.S. Census Bureau.

Considering that young professionals in LA are often hampered with student loan debt and earn relatively less income earlier in their careers, a 10% down payment of $96,000 is more than many make in a given year. Without inheritance or financial help from their families, they're more likely to find themselves renting than buying.

"It's pretty impossible for the average millennial to buy any property in LA County," says Ochart. "You can afford places in [smaller] cities that might not have job opportunities, but when you move to a bigger city with job opportunities, you're priced out."

Ochart has accepted that buying a home in Los Angeles isn't realistic for him right now. "If mortgage rates do go back down to the pandemic levels, then I would definitely be open to that possibility," he says.

But for now, renting makes more sense, and lets him save and invest. "Instead of spending extra money on a mortgage, I use that money for retirement or other investments," he says.

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