July 21, 2008
Even at the Bottom, Many Still Will Be Priced Out
The Associated Press decided it was time to write a little analysis piece about the state of the real estate market, and, interestingly, it decided to focus on the Los Angeles market to illustrate its points.
The main point the author wanted to make was that even if prices slide another 10, 15 or even 20 percent in L.A. and other “bubble” metro areas, plenty of hardworking folks still will find themselves unable to afford a home near where they work.
That’s the dilemma this week for the nation’s lawmakers and millions of Americans who are priced out of homeownership: any rescue policy to stem foreclosures could artificially prop up home prices and perpetuate the affordability crisis in many major cities coast to coast.
Here’s a real-life example:
Courtney Lind and her husband have a combined income in the six figures. They’ve been biding their time to buy in Los Angeles for three years, but they want to buy before their second child is born in December.
The Linds can afford up to a $500,000 home — above the median price for the county — but still short of what homes go for in the Los Angeles neighborhood where they rent.
“We would love to stay here, but anything in our neighborhood is $600,000 or above,” said Lind, 33.
In their price range, she said, they can get an 80-year-old fixer-upper, with about 1,000 square feet of space, and a very little yard on a busy street.
That’s exactly the situation in the area I live in near Wilshire and La Brea and many similar neighborhoods in central and western L.A. You can rent a two-bedroom duplex for a fraction of what a mortgage payment would be. Decent (but small) homes start at about $900,000; a two-bedroom fixer costs around $700K, if you can find one.
The folks highlighted in the story are considering moving farther away from the city to a place where houses are cheaper, as many have done. The tradeoff, of course, is the stress, expense and wasted time of commuting. Whether that’s worth it or not is a personal decision.
A Torrance resident quoted in the story says he’s considering a move to Long 
Beach, which he thinks is not as nice as Torrance but is comparably affordable. That’s an area my husband and I were looking at, until someone told us that it can take up to two hours to get to the Miracle Mile, where I work, during rush hour. Still, I agree that the prices in Long Beach are lower than other places — and Long Beach is centrally located, has some nice older homes and historic neighborhoods, and, last but not least, the only off-leash dog beach in Los Angeles County.
Recent Redfin Posts:
Note to Buyer: You’re Going to Walk Out Over Flashing?
REOs in Sherman Oaks
For Sale by Owner in the 90039
Bargains Elude Bidders: Glendale-Pasadena Sales are Within 10% of Listing Prices
Andrew Waite said:
Cindy: Do you think it has it ever occurred to anyone that living within their means…..means just that.
Entitlement is a bankrupt emotion or political message when “unending” credit is used to support lifestyles that are not justly earned.
If a prospective buyer cannot for reasons of price, savings or credit….rent. Landlords will thank you.
The alternative is to employ geographic arbitrage and move where its more affordable. A
July 21, 2008 8:55 AM
carlivar said:
Agreed with Andrew.
Rent, move, or get a new job.
I never understand why anyone works in West L.A. The transportation options are terrible. There are no trains, except for a small bit of Red Line. Even the freeway options are terrible, usually requiring lots of travel on surface streets as well as freeway bottlenecks like the Sepulveda or Cahuenga passes if you come from that direction.
Though you can always take the bus.
The fact is, Courtney and her husband have made a CHOICE to both live and work in West L.A. They are trading a nice commute and a specific job for home affordability. Those are the facts and there’s nothing they can do about it unless they change a) commute b) job or c) housing expectations.
July 21, 2008 9:09 AM
MadBeach said:
I’m one of the frustrated sideliners waiting for prices to fall — really fall. They’re still too high (oh, and I live in Long Beach — any idea where the Torrance guy is talking about when he mentions a Long Beach suburb with prices around $325,000. I’m sooo not seeing that).
Here’s where I’m getting frustrated with the bailout possibilities: (1) agreed, it keeps too-high prices propped up and (2) friends of mine who would benefit from the bailout are doing nothing — NOTHING! — to prepare (i.e. still vacationing, not cutting back, etc.).
So while I feel for them and think people definitely got taken with a lot of these loans, etc., now that it’s all out in the open, shouldn’t they be, I don’t know, trying to also do something THEMSELVES about it?!!!
(But seriously, I want to know about that LB suburb … if anyone has an idea …)
July 21, 2008 9:22 AM
RED said:
I too live near Wilshire (San Vicente, really) and La Brea and cannot afford to buy around here. Wanting to keep a short commute is key, as my wife and I work close by. Our search is further complicated by our need for 3 bedrooms, not 2. Gotta love kids.
But we have discovered that you really don’t have to travel that far to find a house at a significantly lower price. Lots of people paint the options as rent in these expensive areas or move 25 miles out. There is a lot of middle ground.
If we are successful in our search in the areas we’re looking in (there are decent choices, but we just haven’t found anything we’re happy with), our commute will only be no more than 10 miles — maybe even closer — and still will not have to get on the freeway.
July 21, 2008 9:26 AM
Cindy Allen said:
Mad Beach, the California Heights and Wrigley areas of Long Beach have small older homes that can be had in the $300s. For example, here’s a bank-owned sale in Cal Heights:
http://www.redfin.com/CA/Long-Beach/3569-Falcon-Ave-90807/home/7529403
July 21, 2008 9:35 AM
Cindy Allen said:
RED,thanks for your comment! Please keep us updated on the areas you find that you feel are good choices for others in the same situation. I’m sure there are lots of folks that would be quite interested.
July 21, 2008 9:37 AM
Cindy Allen said:
Carlivar, I see your point to some extent. But LA is home to some unique places to work that can’t be replicated in the suburbs. For example, my part-time job is with a national consumer magazine. In my field (journalism), you have to go where the jobs are, and for us, they’re in LA and NYC.
I worked on Wilshire west of the 405 when I first moved here, which is far worse than the mid-Wilshire area. As soon as you get west of La Cienega, the gridlock starts. If you work there but don’t live there, you’re looking at terrible traffic every day. And there are lots of big companies out that way.
The good news is that my husband now takes the bus to work, and I can walk to work. There’s a lot to be said for that, even if the tradeoff is renting.
July 21, 2008 9:44 AM
Cindy Allen said:
Mad Beach, I should also add that Long Beach has the Blue Line train, which is $1.25 each way and takes you right into downtown.
July 21, 2008 9:44 AM
ryan said:
“MadBeach said:
(But seriously, I want to know about that LB suburb … if anyone has an idea …)”
madbeach, i also live in the LBC and i would guess torrance guy is talking about neighborhoods in north LB… cheap housing is there for the taking if you decide you want to live there…
LB seems to be several cities within a city… with wildly different markets and even different population densities… i am lucky, because i work in LB and the neighborhoods within biking distance (4-5 miles one-way) are actually pretty nice and i do want to live there… still in the high 400k’s right now, but falling…
July 21, 2008 9:49 AM
carlivar said:
Cindy: good point — I think the fault also lies with businesses. For example, Fox Interactive is moving to Playa Del Rey. Yuck! That will be a hellish commute for at least half their workforce.
How to businesses expect to attract and retain good workers when the commute options are so terrible?
If there’s one good thing about high gas prices, it might make downtown more popular (a general move towards transportation hubs).
I did not mention the NIMBY problem either. These folks are the main reason why L.A. lacks more freeways or better train routes.
July 21, 2008 10:01 AM
Cindy Allen said:
Carlivar — I bet the businesses’ locations are for the owners’ or CEO’s convenience. Near LAX, near the beach. The rest of us are SOL.
Just think how many of LA’s problems would be solved if the Red Line went all the way to Santa Monica. If only.
July 21, 2008 2:52 PM
Miguel said:
I am currently looking for a home in the los angeles, area. If you are willing to move to the valley, south los angeles, or east los angeles, there are a lot of very nice homes for 100k and be relegated to neighborhoods that are not top notch. But remember there are many neighborhoods in los angeles that are not necessarily “Hoods”
July 21, 2008 3:35 PM
Miguel said:
excuse the typo, I meant :
there are a lot of very nice homes for
July 21, 2008 3:36 PM
nirad said:
one thing i’ve noticed when looking at houses in older neighborhoods- the previous owner is often a senior who has passed away or is being moved to a assisted living facility. my guess is that prop 13 has allowed these people to hold onto their homes for much longer than would be normal in other parts of the country. having so many SFRs occupied by single older people limits the available stock of houses in neighborhoods in central los angeles.
July 22, 2008 10:20 AM