How do people afford to buy a house here? (Los Angeles: HOA fees, insurance)

[jm1982]

Originally Posted by ihatedcu

I'm sure you already know, we had problems in socal during the 90s. The riots, major earthquake, and recession (defense).

There were problems but the economy was booming in the late 90s . Many people had good jobs and were being paid well. I remember it seemed everyone was driving brand new cars too .
Homes in my west la neighborhood at the time were available for under 300k .

While local wages have not changed much, LA has become more popular on a global level since then.
Especially with the wealthy . We all know that the incomes of the rich have gone up at much higher levels than average local wages too .

Look at how much the economies of China and other countries have advanced since then .
In California the tech industry has produced incredible wealth for some people . Of course things really took off after the late 1990s when the Internet started to be more ubiquitous. I remember my grandmother had a neighbor in her Brentwood neighborhood that had made a lot in the tech boom .

Home prices in LA and cities like SF and NYC start to make more sense if you view them as global markets rather than just American cities .

[nograviti]

That's it, LA, London and NYC are not domestic markets anymore. The guy moving in next to you, is as likely to be from a industrialist family based in South America as be an LA native.

This is sadly the beginning as LA is relatively cheap by global standards. Londoners pay way more for real estate, so don't expect a price fall any time soon.

Currently in the UK there is a reality TV show about rich English kids called 'Made in Chelsea', I view LA as my bolt hole to get away from the WASPY kids who didn't always accept me growing up in London. Now they have launched a 'Made in Chelsea LA', so LA is on the map for rich kids from London now!!

Shining a spotlight on LA, will mean only more Brits will come, they have already driven up prices in New York and it seems like LA is next.

I already noticed loads of French people in Santa Monica. So I think high house prices are sadly here to stay...

[jm1982]

Made in Chelsea hits LA: We catch up with the cast as the reality show heads to the West Coast | Daily Mail Online

Looks like a kind of "Rich Kids of Beverly Hills" type show..

I agree with you that L.A has become more and more popular with the global elite/jet set crowd. Of course it's always been a popular playground for the rich but things have been taken up a notch.

Since you mentioned Santa Monica..a great example of this is the Santa Monica Place Mall
Santa Monica Place | Home

I'm not sure if you remember it before...but before the stores were kind of typical mall stores and many catered to the middle class or lower middle class. They had stores like Old Navy,etc.

Now the stores are places like Louis Vuitton, Armani , Tiffany, and many other high end luxury brands.

This is an example of what has happened in various other parts of L.A too.
Not saying it's right or wrong..and I don't believe there is anything that can or should be done to "stop it"
It makes sense the owners of the land would want to get the 'highest and best use' for their property.

[nograviti]

Yes, LA is changing very quickly, the middle class is in massive decline and they are being replaced by a mobile international class. I think the process was slower as LA wasn't popular initially due to its geographical location and other aspects like pollution/crime. Remember the German tourist who was shot in Santa Monica back in the day.

California brought in European style emissions and crime has fallen, so LA has become a more desirable. I think Santa Monica and Venice will change even more with foreign money. You are right, the mall has changed significantly with more upscale shops. Even Montana has changed as the older low rise properties are being torn down and replaced by huge sprawling mansions.

If you had tried to compare Montana with Beverly Hills back in the day, I would have laughed at you, but now the areas feel the same in parts.

I know some posters on here are furious about it. In truth it's a sign of success and there is little anyone can do about it as the forces are global. All you can do is buy your plot of land and be thankful you have yours. As the prices will continue to go up in the near future. People had the same debate in London and lost, as in the end money won out. If you watch your house go up from 500,000 to 3 million in a decade, you certainly won't vote for any process that stops that gravy train. In London you now have whole areas in the center where few folks live as prices are very high and the majority of owners are from abroad and only come over during the summer!!

I even think South LA will probably gentrify at this rate, which is something I never would have considered previously...

[jm1982]

Agree with your post.

I remember my mom telling me that people used to feel kind of bad for people that lived in Santa Monica. It wasn't considered upper class or a wealthier area as it is now. But now prices there are higher than Beverly Hills.

Yes there is a lot of people angry about it...but I don't think there is a point in being so angry and hoping for a big crash in prices.
People shouldn't give up on buying a house in L.A...as I don't think that's a good mindset...but I think it's a good idea to explore other places too that might be more affordable if you would like to own a house now.

I wouldn't be surprised about South L.A either, but on the other hand even the city of L.A is a huge area (not even including the other parts of L.A that are considered the "L.A area)
They even voted on officially calling South L.A SoLA recently by the city
Lost in translation: Hip nickname for South L.A. leaves some feeling lonely - LA Times
The goal of this is to rebrand SoLA , formerly South LA, formerly South Central L.A into a hip area.
Might not be a bad idea...oftentimes perception is reality...if people think an area is cool or hear it's 'up and coming' it could motivate them to move in. This happened in Echo Park, where people hear about it from other areas as an epicenter of hip 'creatives' and move here from New York,etc.

http://www.nytimes.com/2015/05/03/st...kers.html?_r=0

But as far as gentrification in Pacoima, Panorama City ...not sure when we will see that..if ever.
But I wouldn't rule out 100% it will never happen.

[Cream1]

Even Pacoima has its own microbrewery now (Pac City)

[JohnG72]

Originally Posted by StreetLegal

The median home price in LA County in 1999 was just under $200,000. Your range for Burbank is believable. The West LA range is not. West LA would be higher than Burbank.

Historical Median Home Sales Prices From 1982

Overall, I agree the home price inflation in So.Calif. turned up several notches around 2002. Briefly took a breather in 08/09 and is surging up again. Housing was never cheap here but it used to be cheaper relative to incomes.

Hi, West LA was not then what it is now. Even culver city homes could be had at $250k or so in the mid to late 90's. And believe it or not Santa Monica was not well thought of until the mid 80's or so and still not at current levels. Santa Monica was the setting for 3's company in the late 70's/early 80's if that gives you a better visualization.

Traffic wasn't as fierce as it is now and distant suburbs were still highly in fashion. Demand on the west side wasn't what you might think until the early 2000's


Anyway, I'm not making this stuff up. Just don't feel like looking up sales histories...it can take a while.

[jm1982]

Originally Posted by Howiester

Even Pacoima has its own microbrewery now (Pac City)

Yeah ,and I saw that recently a brewery launched and San Fernando too..which of course is not within the city of Los Angeles...but still in the county and considered part of the L.A area .
San Fernando Brewing Co. Taproom Now Pouring Valley-Inspired Beers | L.A. Weekly

It looks like there are some other newer places that have opened up in the area too.

[CA4Now]

Originally Posted by JohnG72

You are one of the people who called me a liar in the past. I posted several home histories at the time. You never responded that you were incorrect. I'm not jumping through hoops again.

Several posters disagreed with you, but not one of us called you any names.

The 80's housing bubble didn't push homes to current price to income ratios.

No one said it did.

[landsend]

Los Angeles was considered a global city back when housing prices were relatively "normal" before the housing bubble.

I think a commonly overlooked factor in the high prices is proposition 13. Folks back in the 70's and 80's purchased their LA homes at very low prices because mortgage rates were very high (in the teens). The gradual lowering of mortgage rates to our current 4% for a 30 year fixed fueled the escalation in prices.

Back to proposition 13. This law was passed in 1978 and limited property tax increases to a maximum of 2% per year. So a lot of older homeowners in LA now pay property taxes far below the market rate (some owners pay $700 per year for a 800k house) because the annual increases were based on their initial purchase prices (it's common for owners to have purchased for less than $50k back in the 70's). They even bequeathed those properties to their heirs after they passed, preserving the tax savings.

This ultra low property tax became a disincentive for homeowners to sell. Imagine if those homeowners were suddenly forced to pay market rates for property tax? their bill will jump from say.. $700 to $9,000 (what current buyers would pay). They will strongly consider putting their homes up for sale.

I don't think LA has gotten much wealthier (if at all) since 30 years ago but the property tax laws mixed with much lower mortgage rates caused shortage.

proposition 13 was originally marketed as a means to protect older homeowners on fixed incomes, but those older homeowners have benefited (and continue to benefit) immensely at the expense of working people today.