why is rent in la so high? (loans, Americans)

[wehotex]

Originally Posted by artandmusic311

1998 studio near any beach was 500 i rented a 2 bedroom in west hollywood for 700$ in 1997

10 years later 2000$

Are you telling me the banks dont control the home prices and its supply and demand? Thats stupid banks print money which causes inflation and when they direct the new money as home loans then housing inflates more then other commodities

If banks stopped loaning can you imagine how much a house would be worth? Well they wouldnt be a million cause i doubt many people have 1million cash?

Also imagine if they loaned 10million per house? Wouldnt houses raise to 10million? (90year loan?)

So im pretty sure housing price has more to do with banks and less to do with supply and demand

Your $500/mo had to be a "rent stabilized" rent. There's no way that it could been that rate in that year. I lived in a 1BR studio on the corner of Laurel & fountain for $522/mo in 2000, only $430/mo when I moved there in 1993. My 2 BR apartment on Larrabee was $1,200/mo ($600 each) in 1993 with reserved parking space. I'd hate to see what it is now. When I tried to move back to weho in 2002 (sans rent control), I was shocked with $1.300/mo for a 1 BR! I just couldn't afford it on one income. I should have never let go of my little dinky studio place.

[wehotex]

Originally Posted by disgruntled la native

I agree with supply and demand but in some cases, apartment rents have risen exponentially.

The largest apartment complex in West Hollywood charged about 1200 for studios and 2100 for two bedrooms in 2010. in 2013, it is charging 1600 for studios and 3000 for two bedrooms. The value of the dollar hasnt changed much in 3 years, and other apartments in the area are keeping more or less market price.

Which apartment complex is that? Is it Mediterranean Village on Larrabee by any chance? Crescent Gardens on Crescent Hts?

[JohnG72]

I still don't understand this thread. Rents in LA are not high, particularly when compared to costs to mortgage.

In fact, rents have been falling for about 5-6 months now, after a temporary uptick from August-October last year.

I looked about that time for rentals in DTLA and there was little available. What little there was had gone up in price. So I re-upped my lease. A month later there were NICER places available at $150-175 a month less than I was paying.

In fact, in one building(The Blackstone) that had been proclaiming 100% occupancy, their current ads are now priced the exact same as when they opened a few years ago.

I just saw another ad on craigslist for a 1000 sq ft loft at $1675/mo...thats absolutely unheard of for a place that large. Factor in $125/mo for parking and at $1800 its the average rent downtown for a place thats 300sq ft or so larger than the average loft.

Looking recently in South Bay(Torrance), I find that there are 3 bd/2ba apartments for as low as $1500/mo and townhomes and even SFR for $1800-2500. Those amounts are readily affordable to families of four earning $80K a year, at least on the lower end of that price range, and the school district through high school is basically as good as it gets for So Cal. An equivalent house or townhome....well discounting the few outliers, you are looking at $550K+ for a 3/2 1200 sq ft+ house or townhome. Even with 20% down, thats $1800/mo+ and that doesn't factor in HOA or upkeep or housing expenses. Essentially $2500-3500 to own the equivalent that rents at $1800-2500.

Point being that LA rents are not expensive.

[creeksitter]

I like Obamacare because I don't have to run the risk of having my credit ruined due to medical bills.

Back on topic - If your credit is good except for the medical bills explain that to the landlord. If you have been willing and able to pay your obligations (especially rent) many landlords will overlook the medical bills.

[Aldous9]

i wonder what role the lax standards in occupancy rules(how many people can live in a one-bedroom apartment) has on the cost of rent city-wide. I used to work for a company that owned a lot of properties and I would routinely see two families (as many as 6 people) living in 1 bedroom apartments.

With strict occupancy limits those people wouldn't be able to afford those apartments.

[Aldous9]

Originally Posted by JohnG72

I still don't understand this thread. Rents in LA are not high, particularly when compared to costs to mortgage.

In fact, rents have been falling for about 5-6 months now, after a temporary uptick from August-October last year.

I looked about that time for rentals in DTLA and there was little available. What little there was had gone up in price. So I re-upped my lease. A month later there were NICER places available at $150-175 a month less than I was paying.

In fact, in one building(The Blackstone) that had been proclaiming 100% occupancy, their current ads are now priced the exact same as when they opened a few years ago.

I just saw another ad on craigslist for a 1000 sq ft loft at $1675/mo...thats absolutely unheard of for a place that large. Factor in $125/mo for parking and at $1800 its the average rent downtown for a place thats 300sq ft or so larger than the average loft.

Looking recently in South Bay(Torrance), I find that there are 3 bd/2ba apartments for as low as $1500/mo and townhomes and even SFR for $1800-2500. Those amounts are readily affordable to families of four earning $80K a year, at least on the lower end of that price range, and the school district through high school is basically as good as it gets for So Cal. An equivalent house or townhome....well discounting the few outliers, you are looking at $550K+ for a 3/2 1200 sq ft+ house or townhome. Even with 20% down, thats $1800/mo+ and that doesn't factor in HOA or upkeep or housing expenses. Essentially $2500-3500 to own the equivalent that rents at $1800-2500.

Point being that LA rents are not expensive.

for people that live by themselves and want to live in a neighborhood where crazy people don't wander the streets they are.

the problem is there isn't enough single dwelling housing in the city and so the high demand and the short supply is inflating the cost.

[jm1982]

Originally Posted by trancedout

I've always wondered...regardless of supply/demand theory..in LA & NYC, they always profit more than it costs to maintain the building per month. Who is walking away with the check? Some Persian property owner??

It's basically charging a lot, because they can. Someone is making a profit.

Multifamily properties in the L.A area aren't really a great investment for cash flow.

You can do much better in many other markets.

Of course most apartment buildings were bought a long time ago when prices were lower.

A childhood friend's grandfather purchased a few apartment buildings over his life , and those buildings have supported his family. I rented a unit in one of those buildings that was given to his sister. The building is paid off of course so her profit is all rents minus taxes and other expenses.

If you buy something today after expenses you probably aren't going to make too high a return.

Cap rates/returns in L.A are advertised as 5% or so it seems. 5% return isn't really something to brag about. Of course returns can be higher with leverage/loans.

The reason people buy though is for future appreciation/speculation.
Not sure if this is a smart investment these days...but this building sold for 500k in 2004 and now asking 1.25million.

1016 LAGUNA Ave, Los Angeles, CA 90026 | MLS# 13-647279 | Redfin

People buy in L.A not for big monthly returns..but they buy for stability/low vacancy rates and the hope of future price appreciation.

The person that bought the Echo Park building above in 2004 for $500,000 probably didn't buy it all cash (financing was easier then). Let's say the bought with 20% down ...$100,000 and they even broke even on the rents.
So their balance would be $400,000 . I'm not going to figure how much of the 400k they paid down..but let's just say nothing was paid down.

Profit would be 850k after paying back the loan of course if they use a realtor there will be a commission...but you can still see the return is much much better than putting it in the bank or stock market.

Now the person that buys that property for 1.25million is going to look to raise the rents as soon as possible of course, when a rent controlled tenant moves out they will rent it for the market rent.

If someone has the property paid off then yes they can be making substantial money, but if they have a loan on a property recently....they probably aren't making a huge return .

There is this idea that all landlords are greedy and making a fortune off the poor renters , which isn't really the case if you run the numbers.

[Fontucky]

Originally Posted by jjay123

the funny thing is that Americans don't get loans anymore everything is going to immigrants.

I wasn't aware we were immigrants. Learn something new every day.