Los Angeles has the lowest homeownership rate in the entire country and rental Armageddon continues.
Los Angeles County continues to have the lowest homeownership rate of any large metro area in the country. This is across all data. Los Angeles County has 10 million people while the larger LA-OC MSA includes 13 million since it brings in Orange County. Any way you slice the data, Los Angeles is simply not a friendly place to buy a home and the vast majority of people rent and spend a bank breaking amount per month on rents. There are cracks forming in the system where home sale volume is weak and prices are reaching a short-term apex. What is telling however is that the Great Recession officially ended in the summer of 2009 but the homeownership rate continues to decline for L.A.
Los Angeles and the lowest homeownership rate in the country
Los Angeles has had a bad track record in terms of homeownership even before the previous housing bubble expanded, popped, and brought the region to its knees. But L.A. constantly reinvents itself and all of those people that lost their homes have been washed away like a poorly directed 80s film. Now we have our new CGI enhanced home buyers! L.A. builds over the graveyard of foreclosures and does it with an Oscar worthy smile.
Despite the boom in prices and the rhetoric that all is well, the homeownership rate continues to decline:
In 2007 the homeownership rate hit 52.3 percent. It started a slow and steady decline:
Visualized on a chart, this looks much clearer:
What is telling is that the change from 2015 to 2016 is the biggest decline since the drop in 2008 to 2009 when the entire market imploded. This helps to explain the incredible tightness in the rental market or the reality that 2.3 million adult children live at home with their parents. The problem is one that is seen across all large metro areas but is incredibly pronounced in Los Angeles for a couple of reasons:
-Overall, household incomes are lower than other expensive markets
-Prices are incredibly high compared to what people earn
-Tight supply, foreign money, and hype keep the system going
Southern California has an incredible propensity to forget the past. I’m not talking about the Great Depression past of the 1930s but the Great Recession past of only a few years ago. I tend to look at some housing shows as an indicator of market sentiment. When the bubble hit, the number of shows declined and those that did air were showing foreclosures and “deal†shopping. Today, it is commonplace to see bidding wars and people going over budget just “to get in†before it is too late. But these shows are a few months old and when I see open houses today the fever is no longer there. The anecdotes are becoming more the exception than the rule (just look at the chart data). And inventory is growing even in Los Angeles:
Inventory is now back to where it was in 2014 and this is largely due to sales volume being weak:
It does look like we are facing an interim peak and as we discussed in the market cycles article, things shift very slowly in real estate. But of course, this is the cycle to end all cycles and this time is different.
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125 Responses to “Los Angeles has the lowest homeownership rate in the entire country and rental Armageddon continues.”
It seems the cities and towns that have sprung up over the last two centuries are essentially an experiment to see which ones will survive or go belly up. I cannot see how these towns with high costs will eventually will be sustainable. It appears to be more of a way to see how much pain can one endure before they cave in? Keep the engine pressing for higher rents and higher home valuations until a peak is reached.
There certainly are peaks being formed by reductions in rents and home prices. However, for how long?
Seeing news of small towns unable to pay for state pensions is a good sign that we may start seeing a correction coming….Just not sure how soon.
Is it any surprise?
Southern California is inundated with low income earners. Increase the population with low income earners that can’t afford at these levels and the ownership rate will inevitability go down.
We basically have a clash of cultures. We have an increasing population of people who are accustomed to living in larger households. The dynamics have changed in SoCal.
And as usual, NPI is the cure – Nationalist, Protectionist, Isolationist. Evict the invading low-income cultures, protect our own, and watch things get better. For more on this see Switzerland.
Switzerland is a model to follow. I just came from Switzerland (after many other trips in the past) and I can confirm that Switzerland is a nice country to live in because:
1. It has a decentralized political structure (unlike the liberals in US who want a bigger and more powerful central government – ie. more power in the hands of one like Trump or Hillary)
2. All men bear arms
3. It has one culture not a mixture of culture like in US (balkanization); US is easy to divide and conker by the banking cabal.
4. A well educated and civilized population
5. They remain isolated and the population is against massive immigration (unlike US) – although Trump sees the problem while Hilary, like Merkel push for more balkanization of US).
6. They are not into empire building (the US constitution prohibits that but our elites gave up on the constitution long time ago).
7. They have a real democracy not an oligarchy like we have in US (Hilary is the chosen puppet for the US oligarchy).
All of the above are conducive to a very well off population and a very beautiful country to visit.
My Wife had a relative whose Wife was eligible for Swiss residence (100% Swiss Ancestry). They moved there after retirement and sent back glowing reports of life in the Swiss paradise. They eventually moved back to North America and bought a place in a British Columbia retirement Mecca. When I last saw him, he was living in a trailer park in the Inland Empire. Retirement in places like that can blow through a pretty large fortune.
Flyover that sounds wonderful.
I just wish I knew in my early 20s what I know now; that probably the best life course I could take would be to wetback it in Europe and become an EU citizen.
Joe_R – a trailer park in the IE sounds pretty grim – even worse than a trailer park here in the Bay Area, which is where I have a pretty high chance of ending up, if I’m lucky.
Joe R.
Sorry to hear that. Switzerland is not for people unable to earn money and who don’t know how to manage them. Yes, it has a high cost of living because people earn a lot.
Given the high incomes and LOW TAXES, they still can afford a very high standard of living, the highest in the world. Just as an example – you can buy a 5 million dollar and pay maximum $1,500/year in property taxes. In CA, just to have room to park your trailer would cost you more than that in property taxes. In CA, you pay massive Federal, taxes, massive state income taxes, massive sales taxes, massive property taxes, and MELO ROOS &HOA on top of that (oh…and I forgot the medical insurance and massive tuition if you have children). Unless you are a leech on the gov. tits, you are worse off in CA.
Joe R.
Sorry to hear that. Switzerland is not for people unable to earn money and who don’t know how to manage them. Yes, it has a high cost of living because people earn a lot.
Given the high incomes and LOW TAXES, they still can afford a very high standard of living, the highest in the world. Just as an example – you can buy a 5 million dollar property and pay maximum $1,500/year in property taxes. In CA, just to have room to park your trailer would cost you more than that in property taxes. In CA, you pay massive Federal, taxes, massive state income taxes, massive sales taxes, massive property taxes, and MELO ROOS &HOA on top of that (oh…and I forgot the medical insurance and massive tuition if you have children). Unless you are a leech on the gov. tits, you are worse off in CA.
Let in the third world, your city/state/country becomes a third world. Saw this happening since the late 90s, got out 10 years ago and never looked back – except to laugh at the ever increasing levels of insanity. If you dont get tboned by a drunk illegal or feral crack head or go bankrupt by the hospital afterwards, you might catch leprosy or get all kinds of nervous system disorders from the mandatory vaccinations your overlords mandate. Gotta love it!
Prime example from Philadelphia, 1 of many cities that are being destroyed:
https://www.youtube.com/watch?v=DGLx5afTb9g
It’s what we get for making it very hard for British, German, French, etc – good clean civilized people – to come here and live, while letting in the dregs of the world’s failed societies come in here en masse.
Have you ever thought that Disneyland and the hotel industry are at fault. People here illegality, the number industry they work for is leisure and hosptality. The problem is the Trump folks that want to get them out want to take back Ford motor to the US. In Mexico, the best paying jobs are Ford and so forth. So, Mexicans will still be attracted to the OC, since the Donald is also going to bring back textiles to the US, the number three industry they do, By the way, OC also has a lot of high income. This is why Irvine and South County can sell over 1 million dollar homes but this happens when you have a lot of high income you have a lot of low income because people want to go to a restaurant to eat.
This government’s priority is to send our corporations away, employing foreigners, enriching and empowering them, then our money comes back into our country by giving those same people the power to buy our real estate and land, making them our landlords. What kind of twisted reality are we living in?? Didn’t Andrew Jackson warn of this. The banking elite of the world planned this, they want to destroy American ever eighty and are being successful because our population is enlarge poor and stupid, I’m with Trump.
Wow, that was a bunch of incoherent, rambling non-sense. You should be a Trump speechwriter.
Jon should know that Hillary said she believes in open borders during her speeches to bankers for which she was paid $250K plus. Clinton has, in fact, said that in response to the refugee crisis she would raise Obama’s limit of 10,000 to 65,000. That’s 550 percent more, a bit higher than what Donald Trump said of the 500% increase that Hillary wanted.
http://dailycaller.com/2016/10/07/hillary-tells-bankers-my-dream-is-open-borders/
http://www.breitbart.com/big-government/2016/06/15/politifact-says-trump-right-criticism-hillary-clintons-support-500-percent-increase-syrian-refugees/
Can we please get rid of all these Chinese buyers? Vancouver is smart enough to do it; why not us?
Why not us?
NAR, WS & DC
A bubble just suck in the last possible suc…buyer before it pops. I’m as much opposed to capital controls as I am to subsidies and bailouts for bad investments.
Stop it? They did the opposite. The federal reserve and our government created a plan that would give citizenship to any foreigner who purchased a property that was $500,000 or more. Yes it’s a completely manipulated market. And lest us not forget the federal reserve instituted a program for large institutional investors like Goldman Sachs et al, that they could purchase all of the foreclosures in various cities at once, in one large vat, Under the condition that they rented them out for at least five years, at that time they can extend the program for an additional five years, and then at that time they must sell. This picked up the majority of the foreclosures although there are still quite a few that have never been dealt with that are just shadow inventory left sitting on banks books that are now beyond The statute of limitations to even foreclose on but that’s another story. What will be most interesting is to see what happens when the banks must sell. If they follow the rules that is which is also questionable. These are things you never heard about from the mainstream media and actually had to go to the federal reserve website where it was public information that anyone could see but very few do. Hiding in plain sight.
Foreigners should not be allowed to buy US real estate let alone be given US citizenship. This country is divided because those people coming in do not integrate and become American, they push out the people who were in their communities and then make societal pockets that resemble the place they came from. What pisses me ft the most is these women coming here on visa or illegally, pregnant, having babies here usually free in our expensive hospitals, then having those children being given immediate citizenship. Our country, USA, is DUMB
Howard, but that is what our esteemed democrats with Hilary as their chosen savior want – massive illegal immigration of uneducated people. They need stupid and dumb people because only those can vote for someone like Hilary; only those people can vote to have their 1st and 2nd amendment removed and to vote to be taxed out of existence. Who else can vote to have a war with Russia and start a nuclear armagedon except psychopaths and people without critical thinking.
Please post your back up on theory of purchasing a home/citizenship. Thank you.
Housing To Tank Hard Soon!
… Just getting us that much closer to revolution.
Absolutely revolution is coming. Our foreigner policy is as atrocious as our domestic policy. The world cannot even have diplomatic conversations with us anymore, we just act belligerent, disrespectful and unilaterally. If we are not destroyed from outside we definitely will be from within. Our wealth, talent and abilities are being squandered by our huge centralized government. Again, I say give Trump a chance or a 3rd party libertarian or Green Party candidate. Clinton is straight evil
Very well said!…
The third party libertarian this year calls himself libertarian, but he is not. He is a neocon.
Hi Doc
and the places in LA without rent control, the landlords do as they wish…
excerpt:
Located right across the street from the Highland Park Gold Line station, the apartment was built in 1987 and is thus not protected by LA’s rent control ordinance (only buildings constructed before 1978 are eligible). The area has lately become a gentrification hotspot, with low-income workers struggling to pay rents that have risen far faster than incomes in recent years.
http://la.curbed.com/2016/10/9/13220212/highland-park-renters-eviction-gentrification-rental-strike
What a shock! Capitalism at work. Buy an asset. Make improvements. Expect a return.
Would you rather this property go the way of Cuba?
I label that as socialism for the rich. Those renovations and upgrades were most likely secured through cheap and easy credit accorded to mostly investors.
I find it odd people referring to our economy as capitalism, with bailouts, manipulated interest rates, and Wells Fargo style fraud in almost all things, i don’t know how anyone can view this as capitalism.
fascist corporate cronyism, maybe. I just like to call it “swindelism”
Calm down there kiddo. I was referencing one building, one transaction, one instance. Like I said…buy an asset, make improvements and expect a return.
That being said, go run for office and change the system you don’t like. Otherwise…
You make Cuba sound like a bad thing. There’s no homelessness there. Health care is better. Life expectancy and child mortality are better. Crime rate is lower.
Yes, I know, if it’s so great I should move there bla bla … I’d rather see the revolution here in California.
As for the auto industry coming back, all we need is NPI – Nationalism, Protectionism, Isolationism. Bring in very rigorous ID procedures and send all illegals packing. Allow immigration only by people from countries we can benefit by immigration from – Western Europe, Europe in general NOT the Middle East. Shut down all imports of autos, shut down all imports of auto parts, suddenly we’d have a change like the change from the Great Depression to WWII – a crying need for workers, good pay, US-made cars on the streets. Same for electronics, textiles, etc.
I feel sympathy for you alex. It can’t be easy functioning in an adult world with your mindset.
That is about one mile from where I grew up. The people who recently lived in places like that certainly weren’t there when I was there. The crummy neighborhood that Highland Park became drove out most of the Old Timers. Now the low rent folks who messed up Highland Park are being pushed out by the opposite side of the wave. Tough. Find another less desirable nest to foul.
I call this type of event as Eminent Domain with a price. Money is neutral to everyone. It does not care what you are or where you came from. the perfect equalizer in an imperfect world. Perhaps it’s the only tool we have that can shift things around without showing our true nature.
Someone once told me, “Homeownership is not for everyone.” This holds especially true in S. Cali. I know many people who have left or are planning to leave S. Cali or the sole purpose of finding affordable housing.
Prices are still too high, incomes are too low. Makes sense. Vote for Trump ðŸ‘
Agreed! Trump 2016!!!!!!!!!!!!
Your guy who only buys Chinese steel? He has no loyalty to anything but money. The Russians are pumping money into his pockets right now, so guess where his loyalty is? Do you really think JFK or FDR was for sale to the highest bidder?
JFK? Such a great man. Slept with more woman while President than Clinton. But let’s not focus on that. Let’s be tools for the Left a little longer.
As I have posted before, California has the highest fraction of people living in poverty of any state, when adjusted for cost of living. This is according to US Gov stats; called their “alternative method” of accounting for people living below the poverty line. Google search shows the details.
It’s not the state it was when I was living there > 20 years ago now. To me it has turned into a basket case of an economy. How did it get there? People voted in Jerry Brown again. I voted for him once and said never again. I would never have voted him and his group in again. They are getting what they voted for.
I had more extended family leave for Nevada last month.
The beat goes on.
It’s not a basket case of an economy, whatever that means. California is evolving into a third world style economy with a few wealthy employed, retired or foreign buyers making up 25% of the population, and the remaining 75% living with roommates, extended family and/or on Section 8.
This trend can continue forever because the middle class is getting driven out and replaced with wealthier people. meanwhile, average incomes actually go down as the ranks of the lower class continue to swell.
That said, Section 8 is government market manipulation/subsidy, and the government can do anything to the price of housing that it wants. You confuse California real estate with a free market.
And the massive market manipulation happening all across the state by cities refusing to build housing. Limiting supply to nearly zero is not a free market.
Unlike almost all of you, I was born here and I agree with this. Until we gain some self-respect and bring in an NPI program (Nationalist, Protectionist, Isolationist) we’re going to progress further toward the 3rd-world model.
And for those few of us on here who were actually born in California, it’s a choice between staying here or moving to flyover country where it’s living in a hole in the ground by the dump and living in road kill. There are not jobs there, and those $5,000 houses might as well cost $5 million when you’re collecting cans and snaring squirrels for dinner.
Sorry, Alex, but there are fabulous cities all over this country, and the wages aren’t much lower. Making $30K per year in Indianapolis is about like making $100K in LA, and lots of other cities are the same (let alone moving out of the cities and into the country.)
GH if I could make $30k in flyover country I’d look at moving there. Min. wage is about $15k, and you have to know someone to get that min. wage job, also be in your 20s so little to no health problems, work in a warehouse etc but as mentioned, better know someone because those warehouse etc type jobs are sweet plums with 100’s of people who want ’em bad.
Boy, I don’t know, Alex. I was working retail in the 90s in Indianapolis, and after about a year, I became an assistant manager and was making around $25K per year. Even as just a regular hourly employee I was making around $20K. If you stay long enough and work to make it to an actual store manager, you looking at over $60K.
GH the 90s were the last good time. We had a Clinton in the White House and life was good. The only blot on that time was that we, for some idiotic reason, decided to work against Milosovic in Serbia instead of helping him out like we should have. That’s it. Other than that, and that was overseas, things were great.
Sure, if I could hop into a time machine and go back to the 90s I could move to flyover country and do great. I could go anywhere and do great. The 90s were great! You could be fearless in the 90s, because as long as you weren’t intentionally trying to screw up, you’d do fine. Hell, if you weren’t putting a lot of effort into screwing up, you might do fine in spite of yourself. That’s how different things were then. Moving to a new place, starting a company, it was all easy, I know, I did it. Owning a car wasn’t even something you thought about – it was an easy goal for everyone. No pussyfooting around wondering if you’re going to fall into the pit of homelessness. It was a very different time.
Alex, why do you continue with your delusions about the crappy job market and pay in the flyover states?
Bozeman unemployment is currently at 2.6%. Montana overall is 4.0%. You don’t need to ‘know somebody’ to get a job here. Any business even remotely related to construction is booming and would be happy (many are desperate for new hires and are turning away work) to have somebody to hire. That’s a fact, as I talk to multiple people in the trades.
But just carry on with the complaining and how CA is where you’ll stay, come hell or high water.
Jeff the last time I was in flyover country, there were NO jobs, food stamps and welfare were a way of life, and there was absolutely no future other than being “warehoused” on gov’t benefits IF you were lucky enough to have a place to stay – tons and tons of people living in the woods (homeless). After seeing how it is in flyover country now as opposed to how it was in the 90s (not bad at all) I’ll stay here.
GH things were so much easier in the 90s it’s mind-boggling. Own a car, start a business, move to a new place, all no problem. The 90s were the last good time.
I’d brave flyover country if I had a way to make a living that’s really location-independent. Ebay’s a shadow of its former self; my friend and I have 3500 or so items on, to make the same money I did with 120-150 items listed back in the late 90s. So Ebay’s probably out. Maybe if I were a skilled tattoo artist or drug cook or something.
Alex, I was simply talking retail jobs in the 90s, and those jobs are still around. Go work on the sales floor at a sporting goods store or something, and, assuming you work hard, you’ll move right up that ladder in a few years.
The last drive I took in L.A. before selling the house I owned and leaving, was from San Pedro to the S.F. Valley on a Sunday taking surface street the entire way to visit the graves of my Grandparents! It was the starkest reminder of why I was leaving! Much of the drive through the flatlands of the L.A. basin and S.F. Valley were unrecognizable ghetto after ghetto, storefront signs in everything but english, bars on all the windows! Despite the gentrification of some flatland neighborhoods, L.A. is really mostly a third world, run down city! For the most part, the ‘politically correct’ ‘oh I feel sorry for their plight’, crowd strive to live along the coast or in one of the nice zip codes, and never get off the freeway and venture into ‘no mans land’! L.A. isn’t anywhere close to the NAR or Chamber of Commerce PR, but mostly run down slums!
I hate to burst any bubbles, but a majority of LA has been “bad” for decades. This is not some new phenomenon. I remember visiting a friend in Arleta back in the 80s, my car was broken into while it was parked inside his gated driveway!
The gap between haves and have nots grows every year, this will likely drive up prices of desirable coastal areas even more in the future.
We’ve been in Portland a couple of years now, and just visiting family in LA once a year depresses us. It’s easy to loose sight of how shitty it is when you live there…and my family lives in Santa Monica, Studio City, Burbank, etc., so it’s not exactly the worst neighborhoods we’re visiting.
That’s why I’m happy to hear reports of gentrification in Highland Park. God bless anyone who makes some place more desirable.
For a view into the future of L.A., watch “Blade Runner” again.
I remember “Blade Runner” as being dark, rainy, having a lot of Asians (they got that part right apparently) and overall the place was underpopulated. The only crowded scenes were the night markets, and of course those will have crowds.
The high tech in the midst of decay and squalor, they got that right too. Here in “silicon valley” we still have payphones, car ownership is going down and public transit is growing, and we have something like half the population making what I do, about $12k a year (or less). “Mad Max” bike contraptions are always rattling around, there’s always the poor old Hispanic guy pushing his ice cream cart for his 20 miles a day; ice creams are $1 each and he never seems to sell many, is he making maybe $20 on a good day? We have these tall business towers with mirrored sides, and there’s good internet access for the elite, but for most here, the “American Dream” is to have a bicycle and not be homeless.
For the future of Los Angeles, just look up videos of Skid Row. Crowded, desperately poor, and pretty much zero social or economic mobility.
December, 2010
“The longer term consequences of an unstable residential real estate market may be more serious than just the destruction of individual wealth. The ideal of middle class home ownership may be at stake. The census bureau reported a 7% decline in national rental vacancy rates in 2010, along with an overall decline of 0.7% in home ownership rates compared to a year ago. There were fewer “organic†buyers, more renters and more investment buyers in the market in 2010 and I expect this trend to continue into 2011. Are we at the beginning of a sociological movement away from middle class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners.â€
Under my model using how census counts home-ownership I have said for many years the real rate is running around 62.2% – 62.7% based on demographics and the fact that census counts delinquents as owners until they foreclose. We are at 62.9% today
https://loganmohtashami.com/2016/07/28/homeownership-rates-fall-again/
This column has no place for partisan politics. The housing is so expensive in Coastal California because our esteemed leaders wanted to protect the land from the unwashed masses. To do this they created unelected beaurocrats with the force of law. The Coastal Commission is very strict on what they allow and slow to approve – if they do. The building departments of most coastal cities are also very rigid in what they approve. If you put in a housing project you’ll need to build some low income housing also for balance only the neighbors want no low income anything. Any builder wanting to make money and with any sense will go somewhere else. This has led to our constrained supply. Our governor has welcomed and rewarded those that jump the border and move to our state with reduced cost or free medical care, schooling, housing and food. It’s a powerful attractant and these people have little money but they push housing from the bottom creating shortages and constraints.
We are the frogs in a cold pan slowly being heated – and complaining. I see more of the same. The prices will continue to increase in fits and starts. There will be corrections but the following increase will be a bit higher than before. Housing will get more dense and spread further out. The dawn of self- driving cars will cause some to contemplate commuting from Blythe. Hey, we’re living on the river and it’s pretty cheap. Others will move to Omaha or Phoenix. Does anyone have a model that shows a permanent pricing correction that reverts to whatever is professed as being a “sane” price?
The opening of borders and a open and connected society via the Internet causes people to look for business centers that are relatively cheap to live in and have nice weather. Southern California is near the top of that list.
Pull out your list of average housing prices every ten years over the last, say, 100 years. Where do you think the pricing should be stabilized? Do you want the government to do it?
I think it is more of a bottom up thing. The NIMBYs and BANANAs will not allow any building whatsoever. So their elected officials don’t dare oppose them. Brown did try to get some more housing built but got blocked by powerful special interest groups. For now, we are stuck in this trap as it looks very unlikely significant housing will be built in the next 20 years.
Indeed. California needs to grow a pair and take care of its own, running out the 3rd worlders and the East Coast carpetbaggers who are the ones most interested in turning our fine state into some kind of a South Africa style “rich elite and poor everyone else” dystopia.
So you switched from Hillary to Trump?
TJ – Trump’s not gonna do any of those things. He’s going to do whatever the Russians, the Chinese, and the Middle-Easterners pay him to do. Hillary is not my ideal, but I see her as a third term of Obama, a guy who’s been nicknamed the “Deporter In Chief” and who has at least been keeping things on an even keel
My ideal is FDR (he deported a couple of million illegals, even illegals who had citizenship, that’s quite a trick) with Oh I dunno, Lenin for vice president sounds good.
I was looking at a townhouse to rent last week and the property manager mentioned to my wife and I that we seemed like a good fit and didn’t look like “AirBnb-ers”
When I asked, he said he has had 2 cases in the last year where people rented a property strictly in effort to turn a profit by re-listing it on AirBnB.
Next level speculation.
Where are the city leaders?
It may not be as low, but for the drop from 2007 San Diego has LA beat.
Homeownership dropped from 59.6% to 51.5%, more than 8 points in San Diego. Woot!
https://www.apartmentlist.com/rentonomics/widening-gap-between-owners-renters/
Are the gifted and talented kids just less adventurous today? When I graduated college, i headed cross country to San Diego without a job, car, friends, with little savings, with student loan debt, and no car. Later, as a young working adult, unable to afford a home in the Bay Area, I accepted a job in Michigan where I was able to buy a wonderful home. Things worked out. Here is an idea – if you cannot afford to buy a home where you live, move to an area where you can afford to buy a home. Hello.
That is very true. However, it is not good for California’s economy to have such incredible expensive housing. Our companies cannot compete with other states that have readily available housing.
Toyota headquarters is leaving Torrance for Plano Texas. My neighbor is relocating in June.
Aside from tax and business expenses, a main reason given for the move was employee complaints of lack of affordable housing. It was too expensive to attract workers.
Tone – I’m all for this. I’d like to see “tech” spread out, so a person who is lucky/connected enough to get a job in it doesn’t have to pay a million dollars for a house. Parts of Texas are great, from what I’ve read. I’d love it if people could move where it’s affordable and do “tech” there instead of all cramming into one area.
No kidding. I moved from Indiana to California after college, then got out of California and came up to Oregon once we realized how out of touch CA was when it comes to housing. Heck, I may even end up back in the Midwest. My folks are among my best friends, but I never thought I’d live near them my whole life.
“The opening of borders and a open and connected society via the Internet causes people to look for business centers that are relatively cheap to live in and have nice weather. Southern California is near the top of that list.”
I always thought it would be an ideal life if one could make a living using only a cell phone and laptop, (which many can) meaning they can live wherever they choose/afford and not be tied to single dwelling or mired in commuter traffic.
If one is married with family, it presents problems concerning schools and jobs of spouse, but for a single person, I mean, you could spend much of your life renting short term in various cities and states, and really get a sense of the planet we live on. I wish I could do it.
That’s how it is for my wife and I. She can work anywhere as long as she has a phone and Internet connection. I am employed as a corporate pilot and commute to work via airline so I just need to be close to a major airport.
I grew up in Southern California and still love it here. Yes, traffic sucks but thankfully I don’t commute to the office M-F. My wife commutes from the bedroom to the home office. I think we put maybe 10,000 miles on both our cars combined last year.
I’ve travelled around the world along with visiting every major and podunk town in America. California definitely isn’t the only place to live but anywhere else that is worth a damn is equally or more expensive. But if you just want to “live” and are ok with shopping at Walmart and having dinner at Applebee’s then by all means, move to middle America.
People in L.A. have money. There has always been a “third world” segment. The difference now is whitey has to move into the ghetto so you are hearing complaints.
I’m a phone and laptop guy with a family, and we couldn’t wait to leave LA. There are tons of great medium to large cities in this country that are fun and much more affordable.
At this point, I wouldn’t go back to LA even if it wasn’t more expensive. I just don’t get it, I guess.
SoCalGuy – what’s funny is, the “ghetto” is originally a white thing. Jews, Poles, Italians, Irish, etc – all ghetto dwellers for the most part when they came here as immigrants. What I don’t like is this seeming mandate we have now that you must live like you’re solidly middle class OR you must live in the street. Rooming houses, SRO’s, various types of flophouses, essentially, used to be a thing. This is where you lived if you were single and saving money or between jobs or what have you. Then you move up. It used to be a sort of social contract that if you worked, you didn’t have to live in your car or in a tent under the overpass. If you were a worker, you had a roof over your head and access to a real toilet and sink. Thus, those who lived in the street were few, because they really weren’t working. Now, a good number of people who live in the street actually work jobs. As the middle class gets cannibalized, we’re seeing more and more people who were middle class out there on the street. I’m not sure how bad it has to get before something happens.
Traffic in SoCal is nearly 24/7 and it doesn’t matter if you commute or not. A trip to somewhere fun on the weekend is a commute. Sounds like you’re just trying to sugarcoat a choice to settle with terrible traffic.
alex in San Jose: Rooming houses, SRO’s, various types of flophouses, essentially, used to be a thing.
The liberals and progressives did much to kill SROs and flophouses (aka coldwater flats) with their housing codes. Flophouses were cheap to run — no hot water, no bathrooms or kitchens in many units, just a common bathroom on each floor, and a hot plate in your room.
But then building codes mandated hot running water, a bathroom and full kitchen in each unit, and other stuff, etc., for “health and safety” purposes. After which it was no longer financially viable to maintain low rents.
Son of a landlord – Nope that was the rich who mandated that. The type of people who, if they hear you’re homeless, ask you why you don’t just move into your *summer* house. The type of people who will be dangling from nooses come the revolution.
Yes, this is definitely a factor in housing prices here. Nowadays you don’t need to live close to where you work in many cases. If you make a lot of money, and can live where you choose, you are going to choose coastal CA.
Actually if I made enough money to be able to live where I like, there are tons of places I’d choose over coastal California. Hawaii, where I grew up, would be nice. Also, although I am sad to say that according to 23andme I am not the least bit Jewish, Tel Aviv would be wonderful. Clean water, tons of windsurfing and sailing and fishing, a concentration of super-smart people to hang out with, neat history and archaeology stuff in the greater area, etc.
It makes you wonder: why do they keep building new developments all over SoCal? take for instance the Ontario Ranch development in Ontario. 45,000 homes over 13 square miles from the high $200’s for under 1200 square ft “condos” to over $500. its crazy when I see things like that because who’s going to buy them? And thew ones that did buy, how did they buy them?
They don’t. For the past 30 years California has chronically underbuilt housing. At this point we are short millions of units.
Who is buying these places?
People who see it as a better alternative to renting. Renting a 2 bedroom apartment is likely more expensive than paying high 200s for a 1200 sq ft condo.
Ontario does have its own airport (I’ve flown in and out of there and I saw one of the reconstructed “flying wings” fly its maiden flight there) and the climate’s at least nicer than Chino’s. So I guess it makes some sense.
And face it, unless you live right *on* the beach, you’re not going to go there any more whether you live 1/2 mile from it or in Ontario. 99.99% of people are just too busy working.
In fact, it would not surprise me if Angelenos’ California beach-time was at least equaled if not surpassed, by time on non-California beaches. When you get that rare time to get away, why not go to Hawaii, Cancun, or the Caribbean?
Assessments suck the wind right out of that theory.
WTF?
This Sierra Madre house was sold LAST MONTH for $800k. Five weeks later it’s relisted for $910k — http://www.zillow.com/homedetails/500-Mariposa-Ave-Sierra-Madre-CA-91024/20885945_zpid/
That is a beautiful and interesting modern house, though the kitchen and baths could stand a little freshening up. It would sell for at least $800K in a prime Chicago suburb, so the $910K price in CA does not surprise me. How does Sierra Madra rank among CA towns?
I have/had a relative there with a huge house. God knows how many millions that place is worth now. My understanding is, essentially, Sierra Madre is where the rich people from Pasadena went when Pasadena became too mundane for them.
What $865k looks like in Pasadena: https://www.redfin.com/CA/Pasadena/2116-E-Dudley-St-91104/home/7202146
They didn’t even bother to remove the dog from the pictures. And the pool area is a thing of beauty. Like being a movie star.
Listed last month for $899k, but no takers. So now it’s $865k.
Agree this Pasadena house seems overpriced. It’s old and not in very good condition, doesn’t show very well. Kitchen needs to be gutted and replaces. The pool area looks downright bleak. Place has a slightly run-down look to it all around.
Now, if that cute dog was included in the price, that might soften me up.
You think maybe $550k?
That Pasadena place is amazing compared to what that amount buys in the Bay Area.
Sorry. I’d take it as is. Nothing “needs” to be gutted or replaced if it works.
Looks well cared for and hasn’t suffered all the cliches [and cheap and quick re-muddles] of modern flipper asshole HGTV chic.
Does the plumbing work ? Is the roof solid? Is the electrical system up to code ?
Far more important than cosmetics. But mindless open floor plan granite and stainless mad buyers let that trigger them to pay more for cheap flash than actual value.
It’s an old house. So? As it stands nothing needs to be done to it, unless one is a delicate snowflake and has to have what everyone else does. That’s a choice, not a “need”.
This is a LIE: https://www.redfin.com/CA/Los-Angeles/4326-Pampas-Rd-91364/home/4307610
This Woodland Hills house was sold LAST MARCH for $755k, and is now relisted for $839k. The listing says it includes “updated kitchen with granite counter tops and Viking appliances,”
This is a LIE. I toured this house last February. I took photos. I rechecked, and the kitchen looks THE SAME. Wish there was a way I could upload photos to this site.
Maybe the flipper rationalizes that the kitchen was “updated” a few years ago, and so is relatively now. But the clear implication is that the update was done by the flipper.
https://www.redfin.com/CA/Los-Angeles/3429-Alsace-Ave-90016/home/6889923
Property was sold for 570 K 01/2016. It is for sale now at 745 K with NO mention of home being updated/renovated. Crazy
The greed (and stupidity) of people is amazing at this point. There’s no way there isn’t a bubble when someone relists a house for 30%+ in 9 months. Of course it hasn’t sold yet, but it wouldn’t be surprising if it does.
An expensive game of real estate musical chairs comprised primarily of flippers. The higher prices go, the fewer chairs remain.
That price for the Alsace Ave is definitely too high, however, the neighborhood deserves comment. RedFin mentions it is in Park Hills Heights, which is not true. I think RedFin has some default to show the name of the neighborhood, but it is Baldwin Vista. Baldwin Vista is seeing a surge in prices because it is as close to Culver City, Beverlywood and Palms without the high prices.
I bought a home in Baldwin Vista almost 4 years ago and got a good deal. Baldwin Vista should not be confused with the sketchy neighborhoods of Baldwin Village or Baldwin View or Crenshaw Manor.
If you look at the crime maps of Baldwin Vista, you will see that nearly all the crime is the car breakins and shoplifting along La Brea of La Cienega but not within the residential streets.
Baldwin Vista, (sits at the base of Baldwin Hills West of LaBrea) bounded by the Expo Line on the North (keeps out all the riff raff of West Adams), La Cienega on the West and LaBrea on the East. It is the most well preserved mid century neighborhood in all of LA, thanks in part to a HOA which prevents McMansions and ugly remodels. Most homes in Baldwin Vista are on 6K to 8K lots and along the lines of mid-century are larger homes – 1500 to 2000 sqft.
When looking at dollar-per-square-foot, I think Baldwin Vista is the most economical sector close to the beach as you can get. Look for yourself on a zoomable map of LA and you can see that (without traffic) it is 15min to LAX, 15min to Hollywood, 15min to Santa Monica Beach and 15min to DTLA.
less than 2 miles from downtown Culver CIty and less than 2 miles from Sprouts, Trader Joes, Target and the new Culver City Co-Opportunity health food store.
http://www.thepartnerstrust.com/blog/2011/04/baldwin-vista-neighborhood-youve-heard/
http://jameshhill.com/baldwin-vista-real-estate-for-sale/
That neighborhood ain’t the worst, but it’s still pretty ghetto.
Have lived in Los Angeles for the last 13 years. Drove out here from Florida straight out of college with no more than two months rent + expenses in my bank account. Promptly got a job at the small business at which I still work to this day. I myself love the areas of Los Angeles that I haunt. I realize most people here aren’t a fan of the city, but I do think it has a combination of some fantastic weather, eclectic and vibrant culture, and a relatively-relaxed ethos that makes it a great place to live—so long as you situate yourself somewhere reasonably close to your workplace, because the traffic is soulcrushing. That said, the housing prices are egregious, and I’m fed up with this enervated feeling every time I start “hunting.” I’m lucky because my business has a Las Vegas office: I intend to move out to NV early next year, buy something modest, and build up my savings. Most people here don’t have that luxury, but after seeing how the market was propped up by foreign cash buyers seven years ago, it’s hard to not to sense that the “mystique” is a cosmic truth at this point. It’s that very perversity, however, that is the reason I haven’t ruled out eventually coming back and buying in to this madness, though not having the flexibility to relocate predicated on my workplace changing is a nerve-wracking proposition.
Blame the “apolitical” Fed on this bubble.
Laughing at the fact less generalities espoused by ‘below the liners.’ Influx is still significantly greater than efflux (fact). Those of us w/ business sense measure risk, invest accordingly, and with hard work, persistence, and consistency in execution, capitalize! All good… In the end, I will leave CA at retirement. Already looking in resort town if Idaho and Montana. I prefer those resident animals over the ones I brush elbows with at the gas stations weekly here in ol’ Cali.
ID and MT are great. If there is a liberal CA attitude, please leave it in CA.
Jeff: I left CA. And I was born in CA and never had a liberal CA attitude. Funny to find there’s life in somewhere else than LA.
Jeff, I’m coming to ID and Montana to buy up real estate and I’m a big fat liberal…oh and I’m after your guns
When is the crash coming? Getting tired of waiting. How long more? :))
DONALD TRUMP, speaking Thursday in West Palm Beach, Fla.:
“This is a struggle for the survival of our nation. Believe me. And this will be our last chance to save it on November 8th. Remember that. This election will determine whether we’re a nation or only — democracy but, in fact, controlled by a handful of special global interests, rigging the system, and our system is rigged. This is reality. You know it, they know it, and pretty much the whole world knows it.
“The establishment and their media neighbors wield control over this nation through means that are very well known. Anyone who challenges their control is deemed a sexist, rapist, xenophobe, and morally deformed. They will attack you. They will slander you. They will seek to destroy your career and your family. They will seek to destroy everything about you, including your reputation. They will lie, lie, lie and then again they will do worse than that. They will do whatever is necessary.
“The Clintons are criminals. Remember that, they’re criminals.
[Crowd chants “Lock her up!”]
“This is well documented, and the establishment that protects them has engaged in a massive cover-up of widespread criminal activity at the State Department and the Clinton foundation in order to keep the Clintons in power. Never in history have we seen such a cover-up as this.
Of course the dishonest media will not report this. They spend all their time finding things he said or did in private 10+ years ago. I’m voting for Trump and have supported him since before he announced candidacy. Hillary Clinton is a sick evil woman
Here is another attack caused by the Natzi/fascists democrats to a GOP headquarter:
http://www.msn.com/en-us/news/us/gop-headquarters-in-nc-town-is-firebombed/ar-AAj1Uyd?li=BBnb7Kz
The “brown shirts” of Hitlery are out in force. They attacked also another center in Maine. Same as in Hitler playbook.
If the home ownership rate is lower, who is buying these houses? Are they owned by banks or hedge funds?
House-horny 1st time buyers who don’t know any better.
My question is … who is going to be lining up to buy all these $1 million homes after this current group of monied buyers? Seriously, in L.A., except for hi-tech, Doctor’s, Dentists, and perhaps executives of companies, which is a relatively small percent of the population, who has the financial ability to pay those prices? The economy isn’t creating $150k jobs by the bucket full, and realistically, do you really think the economy will ever be what it once was?
It used to be in the quiet little village of Santa Barbara in the 70’s, that if you wanted to sell your house, you had to wait for someone local to work hard and save up enough to afford the $50K it took to buy your 3/2 house. Now, hedge funds, Blackstone, foreign investors with dubious suitcases of cash, and LA wealthy looking for another vacation home are waiting to pounce before a local can even get a bid in for the $1.2M the owner thinks it is worth. BTW, the owner must have died because they would have been fools to be willing to part with $800 in Prop 13 property taxes per year on a $1.2M house and they certainly wouldn’t have passed up the $15K/ month AirBnB potential which drives down inventory. In other words, there is too much competition today for a normal person with a average income to afford a house.
There are many countries where property is unaffordable. We are now one of those countries. Present policies are sustaining unaffordability. Maybe we are permanently becoming a country were property is unaffordable to the middle class. Many wealthy foreigners own property in their countries but live out here in So Cal and are supported by their properties in their original country.
Your comments “a country w(h)ere property is unaffordable to the middle class” is either hyperbole or naivete. Sure, LA, SF, NYC are unaffordable, but most of the USA is still affordable to the middle class.
As of 8/31/2016 median home sales price: $240k. See: https://ycharts.com/indicators/sales_price_of_existing_homes
The latest median family income numbers are from 2015: $55,775. See: http://www.deptofnumbers.com/income/us/
So the price/income ratio is 4.3. Please clarify for me just how terrible that this is, because it doesn’t seem bad to me.
Or, just carry on with “the sky is falling”.
Look at incomes relative to prices in any area you choose – you cant take a coastal california salary and apply it to housing in the midwest. Home prices are out of whack, even in a lot of rural and flyover areas. In fact I’d say in the majority of places you look in this country prices are well above historical norms. This sucker is going down, as it already is on the high end. Plebes at the bottom that dont read are always the last to figure things out.
There are MANY affordable homes in the US, they are just not in the populated cities of S. Cali.
Great example in Culver City of madness.
https://www.redfin.com/CA/Culver-City/3833-Vinton-Ave-90232/home/6722530
Least desirable area just off Venice – definitely not like south of Sony CC. Tiny lot. Foreclosed after last bubble. Finally sold in 2014 at same price it sold in 2006 (but not quite). 2 years later they think it’s worth 995k. Really?
For almost 1 million dollars you don’t even get central AC anymore.
That house is sort of cute…… for $200K or so. But for nearly $1M, I want some real space, grace, good finishes, and a dishwasher, at least. I suppose that an aesthetically pleasing patio in the back and some decent, climate-appropriate landscaping would be too much to ask for at that price.
I’m giving away my age bracket when I tell you that Los Angeles was, a few decades ago, one of the more affordable areas in the country. In the 50s, the little subdivision houses in Lakewood, CA were cheaper and better than the little 3-1 cookie cutter ranch my parents bought as a starter, in a cheap suburb of St Louis.
Uncertain economy no mater who gets elected, uncertain global military crisis, uncertain future for Cal (major EQ overdue), uncertain future for the children.
Only thing certain as usual death and taxes, enjoy everyday like it is your last.
i got some good news for people who want a affordable house in houston,you will have to live in sealy or angelton, very disturbing.at least you can watch some great high school football in those two towns,to read the story nancy sarnoff twitter.
Man comments on this blog are just full of people who have to constantly prove that they are “right” and the world is “wrong”. It is like this right wing victim mentality that I thought only poor people had. In the meantime, people who realize that the world just “is what it is” go on investing in the market and making bucketloads of cash while all the naysayers complain that the world hasn’t come to an end yet.
I can always count on the messages being left on this sit to give me my monthly dose of elitism with a splash of subtle racism
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