The Los Angeles Housing Crisis California Rentals
Anyone can see looking at craigslist over the last three years that rentals for apartments, condos and even shared rooms have risen exponentially. The housing crisis is due to several factors colliding with the limited workforce that can afford an apartment in downtown Los Angeles or Santa Monica these days. Basically a 100k salary after state and federal taxes, social security payments, healthcare, vehicle costs, etc,etc. A one bedroom apartment at 3k a month can dig a pretty good dent in a “ high salary job”.
The truth is 100k a year will not even begin to cut it if you have a family and are looking to buy a house later. In spending over 50% of a salary (after taxes) many professionals in the field of technology and the film studios find it harder to saver money. This in no way competes with the hardships families of blue collar workers and service employees have to face. The truth is the commuting from the Inland Empire and beyond to downtown Los Angeles is the de-facto “answer to the problem”, but it really is just a band-aid on a deeper issue.
The surrounding real estate laws made for a “landlords market” have ensued to allow the eviction of older rent controlled areas. It was only a matter of time before someone came up with a way to circumvent the long standing rent controlled areas of prime real estate Santa Monica and Ventura County. The California real estate law, the “Ellis act” allows for a rent controlled building to be “refurbished” making it essentially a new building category, condo, whatever. In creating the new business entity category of condo, it becomes exempt from a rent controlled status.
There is nothing wrong with making a buck and landlords need their properties to be turning a profit, especially in these luxury rent controlled areas, but it has added to the mix of astronomical housing prices. In areas like Venice and Santa Monica much of the luxury rental properties and housing is being bought by people in the tech industry, but is it possible a tech bubble will collapse?
One thing is sure, tech jobs can be outsourced at the drop of an email and computer code cannot be copyrighted. This means as investors and CEOs look for ways to cut costs they can replace an entire staff in a day and save 50%-80% on wages for highly paid “tech geeks”. This is not an illusion as I went to a recent tech convention in San Francisco where dozens of CEOs from companies in India and China were wining, dining with US based business leaders. Its all just a matter of time and as we all know, what goes up must come down.
Will Los Angeles real estate prices, home prices and rental costs level off. or get back within the range of what people can afford? You betcha, it may take 20 years or 20 minutes but when the big one hits there will be a dramatic re-shuffling of Southern California real estate prices. When is the best time to sell your house in Southern California? We are almost at “ the top of the game” if you are thinking of moving to a cheaper location or cashing out while prices are high it may be time?
