Too many questions (apartments, foreclosures, renter)

[Userdavey]

LA is such an enigma to me. It is so fascinating and so huge and SO misunderstood. It is hated by locals and people who have never been there before. And I am sure that those who love it the most probably don't talk about it on message boards.

But from what I have seen firsthand, it takes lots of money to live happily in LA. And if I had the money, there is no other place I would rather be. But until then, it is a huge impossibility.

One big question is this:

How does LA even function? Where do all the sanitation workers, busboys, construction workers, fast food employees, waiters, and others who make eight or ten bucks an hour even live? Is there an answer to this question other than
a)they live at home.
b)they live in the ghettos.
c)they room with others.

???

I just don't see how everything functions there especially after reading these boards lately. Is there a secret to getting by that I am unaware of?

[SOON2BNSURPRISE]

As far as those making $8 an hour as a sanitation worker or in construction I don't know any of them. When you talk about sanitation workers are you refering to the guy that halls the trash away? They don't do so bad around here thanks to unions. The same can be said with construction workers. Also to build something for a public entity such as a school or city in this area they are paid prevailing wage. Chances are no one is making less than $15 an hour and chances are into the $20 or $30 an hour range. With private jobs chances are the few in construction making minumum wage ($8 an hour) are those doing construction cleanup. Around here construction pays well but only when jobs are around. Not too many new projects starting now.

Of those that I know that are working fast food, as waiters, or some other food industry job they are either young and living at home, or this is a second job for them to supplement their 9 2 5 job. At one place my wife and I visit, the couple that owns the place have other jobs, the employees also have other jobs. One couple that works there are school teachers during the day and work the club at night on the weekends. The place doesn't open till 4:30pm during the week and makes for a nice second job for those that work there.

It is not that people make it working as a waiter or some similar job. They make it by working that in addition to another job.

[uptown_urbanist]

I agree with Soon2bnsurprise - not all of those jobs pay that poorly, and the people who are making little money are probably working multiple jobs, or have several people in the household contributing, living in a cheaper neighborhood, etc.

LA is expensive, but many older people were lucky enough to have bought homes when they were still within the reach of "regular" people. Some apartments in LA are also covered by rent control, so some people are benefitting that way.

I know how people afford to live in LA - what I don't know is how people manage to buy homes in LA. (of course all the recent foreclosures in the LA area show that a lot of people really couldn't afford to buy, after all)

Realistically someone making $10 an hour isn't going to be able to afford to live in a big, spacious apartment in a nice neighborhood all on their own salary. But that's true of many American cities.

[vegaspilgrim]

Originally Posted by Userdavey

How does LA even function? Where do all the sanitation workers, busboys, construction workers, fast food employees, waiters, and others who make eight or ten bucks an hour even live? Is there an answer to this question other than
a)they live at home.
b)they live in the ghettos.
c)they room with others.

It's pretty simple actually... just about anybody-- including you, can live here, if you can't cough up the cash to live in style you simply lower your standard of living. That can mean:

Packing 2 or more (or 3 or 4 or 5 or 6 or 7 or 8 or 9 or 10...) bodies per bedroom.
Driving around beat up cars with no insurance. Or not driving at all, just taking the bus around.
No health insurance.
Eating unhealthy fast food to fill your stomach up cheap.
Living in marginal neighborhoods. Parts of LA are almost third world. Or even living on the streets. LA has a MONSTER sized homeless population, it's no joke at all.
It's a real question how people making minimum wage can survive in any city, not just LA.

[MIKEETC]

Originally Posted by Userdavey

...

One big question is this:

How does LA even function? Where do all the sanitation workers, busboys, construction workers, fast food employees, waiters, and others who make eight or ten bucks an hour even live? Is there an answer to this question other than
a)they live at home.
b)they live in the ghettos.
c)they room with others.

???

I just don't see how everything functions there especially after reading these boards lately. Is there a secret to getting by that I am unaware of?

d) they commute - sometimes from residences in so-called bedroom communities 1 to 2 hours away.

[vegaspilgrim]

The question I have is not how people making minimum wage live in LA. I wonder how people who make a salary of between, say, $25k-$50k, which is common for entry level post-college positions or even experienced professionals taking whatever job they can get in an economy like this, who grew up with and are accustomed to middle class American standards of living-- how those people live in LA and why they choose to live in LA. What's the point of living in oh-so-cool "LA" if you don't have any money left over after paying rent and car expenses (and for many jobs, having your own transportation is a unofficial requirement for employment) to eat at all the trendy restaurants and shop at all the boutiques and partake in the nightlife or have some extra money to go on a vacation once in a while? From my calculations, $50k is what you need to afford to live in LA and have your own one bedroom apartment (in an old building in a non trendy neighborhood), drive a car, eat out and go to a movie theater once a week, be able to pay all bills-- and just break even. Anything much less than $50k and something has got to give-- most likely bulking up on roommates, college dormroom style.

I also wonder why people who make anywhere between $50k and $150k live in LA and blow their money renting apartments, when that same rental payment could be a mortgage payment on a decent house in a normal American city. Especially people who live in crappy apartments but have a luxury car. I've never understood that one. Since when did being a life long apartment renter become the American dream? I think to really be living the high life in LA you need a salary of at least $150k a year. I'd say $250k to really be smooth.

[MIKEETC]

Originally Posted by vegaspilgrim

The question I have is not how people making minimum wage live in LA. I wonder how people who make a salary of between, say, $25k-$50k...

...$50k and $150k live in LA and blow their money renting apartments, when that same rental payment could be a mortgage payment on a decent house in a normal American city. Especially people who live in crappy apartments but have a luxury car. I've never understood that one. Since when did being a life long apartment renter become the American dream? I think to really be living the high life in LA you need a salary of at least $150k a year. I'd say $250k to really be smooth.

I once heard a rule (probably more of a guideline) that stated the house you buy should cost no more than 3 times your annual salary - which seemed reasonable. So if you made $50,000/year, the maximum price of a house that person should be planning to purchase would be $150,000. Obviously, if one is married, the price can go higher and if the wife/husband makes the same amount, a $300,000 house seems attainable.

Of course, I heard that somewhere. I may have heard it wrong or maybe it no longer applies . Or maybe it was a pessimistic guideline...

[gypsystar]

Just wanted to say that not all construction workers are homeless here - my husband is in the union and they make about $40/hr...

[motoman]

Originally Posted by MIKEETC

I once heard a rule (probably more of a guideline) that stated the house you buy should cost no more than 3 times your annual salary - which seemed reasonable. So if you made $50,000/year, the maximum price of a house that person should be planning to purchase would be $150,000. Obviously, if one is married, the price can go higher and if the wife/husband makes the same amount, a $300,000 house seems attainable.

Of course, I heard that somewhere. I may have heard it wrong or maybe it no longer applies . Or maybe it was a pessimistic guideline...

No, that's accurate. Traditional lending standards for mortgages, which were thrown out the window in the sham that was the California housing bubble, is that you should spend no more than 33% of your gross income on housing. That is a maximum. Realistically you should spend much less than that because you have all of the other expenses of life, like cars, education, etc.

Agents in California, including the California Association of Realtors, say it is reasonable to spend 40% of your gross pay on housing. Well, they're smoking crack out of their a$$. Do the math. After paying 30%-40% in taxes, and 40% on housing, that leaves just 20%-30% of your gross pay to fund every other expense you have, including saving for retirement. Obviously the math doesn't work, which is why housing prices in Cali have tanked and will continue to fall for a while.

[EscapeCalifornia]

Originally Posted by MIKEETC

I once heard a rule (probably more of a guideline) that stated the house you buy should cost no more than 3 times your annual salary - which seemed reasonable. So if you made $50,000/year, the maximum price of a house that person should be planning to purchase would be $150,000. Obviously, if one is married, the price can go higher and if the wife/husband makes the same amount, a $300,000 house seems attainable.

Of course, I heard that somewhere. I may have heard it wrong or maybe it no longer applies . Or maybe it was a pessimistic guideline...

Those numbers hold true because that's the upper limit of what is affordable every month given a 30 year mortgage and an interest rate in the 6% range. Spending more than that is called being house poor and seems to be quite popular in California.