Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
Ucla recently covered this topic. LA has 85 hoods and the population is predicted to grow 30% by 2030. The city is looking for solutions to help with the housing shortages including allowing granny flats in backyards. Where are you pioneering for gentrification today?
Depending on how you look at the market, allof Los Angeles is gentrifying.
It's estimated that we need 100K+ new units of housing just to meet current demand. Last year, Mayor Garcetti set a goal to build 100K new units by 2021 and I know from following him that he has been involved with ULI and local governments in identifying the causes behind the shortages as well implementing policy to enable/encourage more high-density development in the area.
I just returned from checking out some open houses in Compton, Inglewood, West Adams, and in the south side of Mid-City .
What I'm hearing from everyone I speak to is the same: there's no inventory so everything is flying off the shelves with multiple offers. Those who opt for conventional or FHA financing are usually the last to win and there are little signs of it slowing - even with looming interest rate hikes.
I've personally heard no one talk about water being an impediment to development.
That said, I'm long on the LA market. The addition of 4000+ jobs from Google in Playa Vista, the expansion of the tech sector from Santa Monica south into Playa / Marina, the revitalization of downtown / urban core, the weather, the economy, the attractions, the culture, expanding public transport, etc - are all factors in LAs continued growth.
Strategically, I would be BUILDING in the city as much as I can, anywhere in the LA metro area. Supply is the issue and so far as I can tell, there are few neighborhoods immune to the problem.
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The Los Angeles Urban Land Institute chapter is holding an event in August to discuss how to tackle the housing crisis in our city.
Wow - amazing population growth. Shortages of RE is not the real problem - water is...
Besides, why are so many people going there? Personally, if I wanted to deal with socialism and shortages of basic resources like water and toilet paper, I'd move back to Russia...lol
Instead of CA, why not Kadiz, Spain. Gorgeous, though has its hoods. But, right on the drink and great weather. And, there's bulls running in the streets -- aren't you tired of NFL?
Shortage of water will probably lead to shortages of real estate. It will just be one more limitation on development which will lead to further development costs and restrictions for new development. Less future inventory and higher replacement costs.
@Ben Leybovich Wait until you see the el nino coming this season. You will wish we were back in a drought. Land is the issue.... that is none left, unless your 50 miles out. Peeps are moving here for the weather typically but they are coming from all over the world to realize their dreams. That has always been the running theme to the LA "why". Now many move out too. 73% percent of those make less than 50k and the majority moving in make 100k+. Creating more reasons why gentrification demand in some areas is perpetually compounding.
@Ben Leybovich Below is the chart for LA county housing needs. Now LA city proper would resemble SF when you unpack the numbers within the city limits. Most of the building since the 80s has been 30+ miles out. Thoughts?
This is interesting, and I do think gentrification is a hypothetically viable solution, but it doesn't seem realistic in many regards. I presume L.A. will have to expand outwards to account for its population growth until eventually people are just moving to Southern CA to taste the "LA aura".
Why not Kadiz?? Your humor will get you far in this world.
I just got through a stressful conversation about buying property in Los Angeles and then signed on to Biggerpockets and immediately proceeded to choke on my leftover pastrami sandwich from the world famous Langer's deli.
Elon Musk is on his way to pretty much solving the electric car problem. I am sure someone in California is eyeing the water problem (hello reduced desalinization costs) as a business bonanza.
"California’s economy benefits from diversity and job growth that has expanded beyond the tech industry in recent years, said Steve Levy, director of the Center for Continuing Study of the California Economy"
I just got back from the mid west. My target duplexes had been snapped up. Bummer. Prices in your neck of the woods are nice no doubt, but there is something about the sunshine in California... I'm sure you can finish my thoughts.
Depending on how you look at the market, allof Los Angeles is gentrifying.
It's estimated that we need 100K+ new units of housing just to meet current demand. Last year, Mayor Garcetti set a goal to build 100K new units by 2021 and I know from following him that he has been involved with ULI and local governments in identifying the causes behind the shortages as well implementing policy to enable/encourage more high-density development in the area.
I just returned from checking out some open houses in Compton, Inglewood, West Adams, and in the south side of Mid-City .
What I'm hearing from everyone I speak to is the same: there's no inventory so everything is flying off the shelves with multiple offers. Those who opt for conventional or FHA financing are usually the last to win and there are little signs of it slowing - even with looming interest rate hikes.
I've personally heard no one talk about water being an impediment to development.
That said, I'm long on the LA market. The addition of 4000+ jobs from Google in Playa Vista, the expansion of the tech sector from Santa Monica south into Playa / Marina, the revitalization of downtown / urban core, the weather, the economy, the attractions, the culture, expanding public transport, etc - are all factors in LAs continued growth.
Strategically, I would be BUILDING in the city as much as I can, anywhere in the LA metro area. Supply is the issue and so far as I can tell, there are few neighborhoods immune to the problem.
---
The Los Angeles Urban Land Institute chapter is holding an event in August to discuss how to tackle the housing crisis in our city.
@Joshua McGinnis@Carlos Taveras Inglewood is still relatively affordable for LA it appears. You got to figure geographically it has advantages too. It is not close to being gentrified yet. What price points are you guys looking at? Is this for flip or hold?
Why not Kadiz?? Your humor will get you far in this world.
I just got through a stressful conversation about buying property in Los Angeles and then signed on to Biggerpockets and immediately proceeded to choke on my leftover pastrami sandwich from the world famous Langer's deli.
Elon Musk is on his way to pretty much solving the electric car problem. I am sure someone in California is eyeing the water problem (hello reduced desalinization costs) as a business bonanza.
"California’s economy benefits from diversity and job growth that has expanded beyond the tech industry in recent years, said Steve Levy, director of the Center for Continuing Study of the California Economy"
I just got back from the mid west. My target duplexes had been snapped up. Bummer. Prices in your neck of the woods are nice no doubt, but there is something about the sunshine in California... I'm sure you can finish my thoughts.
I'll save a spot here for you!
Cheers! ;-)
AZ, HI, Italy, Spain, even some places in Portugal. I am unlikely to stay in Mid West forever. But, if I were searching for sunshine or drink, there are certainly many more attractive places than CA today. Now - CA yesterday, may be. But, today...
I'm also looking into inglewood. what did you think when you visited?
I didn't stumble on any deals, but there are some nice neighborhoods in Inglewood. I'd invest there.
We drove all around the north side of Inglewood all the way up into View Park - Windsor Hills which was really nice.
There were a lot more houses that looked lived-in and were on a nice street, but had plenty of value to be added if they could be acquired at the right price.
My only nit about Inglewood is that I'd like to see more local retail and restaurants on it's main drags in lieu of fast-food joints and car repair shops.
More regarding the long term water outlook in California:
"The Water Replenishment District of Southern California, which manages groundwater for parts of the region, has set a goal to wean itself off imported water altogether by treating and recycling wastewater and collecting more stormwater."
@Ben Leybovich I think you might be under estimating your CA underwriting:) First CA economy is bigger than the entire county of Russia. Cali would be a qualified member of the G8 as is.
The water deal varies for each city/region. LA secured water rights decades ago and owns a portion of the Sierra Nevada run off as well as other sources. There are also a dozen plus desal plants in the works as well as the largest in North America coming online any day down in SD. That one cost over a billion. LA has no proposed desal plants...because it is not necessary. This point will be moot after a couple el nino seasons. I have seen it before.
Here is one just LA stat to consider just to give small taste of what is up locally. UCLA gets over 100k applicants each year, significantly more than any other college in the country and there are several highly rated universities in LA pumping out new talent like a machine.
So there might be other areas in the world with great weather, there are not other areas with the this vast economy in place as a combination. It would be rad if you were out here! I know you would kill it!
Matt - are you trying to convince me to move to CA? Cause, first - CA, as large as it is, ain't big enough for both @Brian Burke and I. And secondly, I just don't see the romance in it. There simply are so many places I'd rather be, with people not stacked one on top of another like sardines :)
@Ben Leybovich Right on G. I hear ya. Those sardines are your customers. There are many areas with low pop. density even in the big cities. One LA city hood I recently purchased in has more percentage of SFH per capita than 98% of the country for example. (Very low density population and vacancy rate is effectively zero) So one can kind find any type density to invest or live here. But yes, I would love to have you nearby teaching me all the REI ways personally! I can only imagine what leftover gems I could end up with following you around in the LA area. Just think of all the good weather days you could cruise your cycle on Mulhulland or PCH...
@Ben Leybovich Right on G. I hear ya. Those sardines are your customers. There are many areas with low pop. density even in the big cities. One LA city hood I recently purchased in has more percentage of SFH per capita than 98% of the country for example. (Very low density population and vacancy rate is effectively zero) So one can kind find any type density to invest or live here. But yes, I would love to have you nearby teaching me all the REI ways personally! I can only imagine what leftover gems I could end up with following you around in the LA area. Just think of all the good weather days you could cruise your cycle on Mulhulland or PCH...
Haha - that's the thing, if it were just about the weather, there are plenty of choices. I'm hot and heavy on AZ right now. In fact, In am planning a fishing trip with Serge S in a couple of weeks out those parts. Unlike Burke, Serge actually wants me to move closer to him :)
P.S. And considering that Turner is playing hard to get, I might just have to shift gears :)
Ben, Ben, Ben ... Cádiz is gorgeous, so are Seville and Málaga. However, "el encierro" is at the Fiesta de San Fermin in Pamplona, Navarra 1000kms NE of Cádiz ... about as far away as one can get and still be en España.
In 2001, I arrived in Pamplona three hours too late to participate - much to my wife's relief.
Its going to happen people. The average LA house will be going for near to $1M same as in San Francisco. Its just a matter of time. The market and expectations from the LA real estate market favor the buy and hold strategy although you can still get in some fix and flips. Also depends on the entry point and less barriers if that is a consideration for you.
The story never changes money begets money and money attracts money. Are you looking for an ideal place to live or just a good place to invest?
While maybe posing challenges to entry for newbies LA is certainly setting itself up to pay those who are better well healed financially very handsomely.
That is my take on things with regards to California.
I thought folks were crazy out of their minds when they started to buy the median prices house at $250K in San Francisco but look what has happened over the years. Now the cheapest property you can buy in San Francisco is near to $750K and above for the most part.
on opening day people come in groves and form lines to buy a fixer upper for over $1M and most are getting offers above asking price.
Is this good or bad? I do not know but someone is making allot of money that is all I can say.
A 100 year old apartment building which I was sure would be torn down just sold for over $20M
@Ben Leybovich Bro, I don't think you understand what it like cruising a cycle in the desert heat. Think Wizard of Oz scene when the witch is melting....but yes some investors consider Vegas and Phoenix as sort of part of Socal for investments.
You can tell we are nearing the top of a market cycle when threads like this start popping up repeatedly. I think it will be another couple years before the market peaks, but there is an awful lot of Kool-aid flowing in California these days. Nobody... and I mean NOBODY... thinks home prices are going down again.
It was only four years ago that everybody thought it was the end of the world and people would tense up if you told them you were buying property. My how things have changed.
@Brent Seehusen Brent I feel ya. I know you have been around this block. I just don't see the fundamentals pointing that way south. Pre GFC that was another story for sure. It is hard to qualify now and so much harder than before. Where are you seeing this coming crash coming from? These socal prices are reasonable when compared to other world class areas. Outside of some global meltdown...are you doubting the retail demand?
@Matt R. The basic outline for a crash is when affordability gets stretched to the limit and even highly educated people start to feel a sense of hopelessness about ever owning a home. Then a recession hits and all the late-comers that stretched to buy start losing their jobs, leading to a wave of foreclosures and forcing prices down. It happened in the 80's, 90's, and 2000's. The 80's was a bit of an anomaly because high inflation kept nominal prices flat, but in real terms homes were losing value and people were struggling to pay their 12%+ mortgage rates.
Like I said, there is probably a couple more years to go. The affordability products are just now starting to re-emerge and that will take some time to play out. A few weeks ago I heard that 80/15 piggy back loans are making a comeback for those that can't put 20% down, and today I came across this article that interest only loans are coming back:
The nation's second largest wholesale lender is going to be offering these, so brokers nationwide will soon be marketing IO loans to their clients that can't afford to buy using conventional loan terms. Sound familiar?