Many people have the desire to live in Los Angeles for obvious reasons, such as the ocean, beaches, temperate climate, and more. If you have ever been to LA, then you know how expensive it can be in general. But why are LA apartments so expensive. Show LA apartments are so expensive for the most part because there is often a higher demand for them than homes for sale. This is because, as with rental properties, homes for sale are often astronomical. Knowing whether you can afford an apartment in LA depends on what you do for a living as well as other factors. Keep reading to find the reasons there is a higher demand for rental properties over those listed for sale. High Demand for Apartments in LADue to many factors, there is often a higher demand for apartments and other rental properties than houses that are for sale. While there are still many people who own property in LA, the majority of the population relies on renting. Los Angeles is currently rated among the top five cities in the United States with the highest rental costs. Although rentals in LA are not quite as expensive as they are in places like San Francisco, they are still higher than most of the nation. Keep in mind that rental costs and home sale prices are what drives the cost of living in a specific area. This is especially true in places like LA, where housing prices are astronomical, and as a result, other commodities such as fuel, food, and energy must also be higher. As much as some people are moving out of the LA area, others are flocking to the City of Angels to get a semblance of the beach life. As they move in, they are faced with the task of having to find a place to live. Finding a place to live in a place like Los Angeles can be overwhelming, especially when you are coming from a conservatively smaller town where homes did not cost an arm and a leg. Needless to say, as people are moving in, there is a greater demand for a supply of housing developments to accommodate everyone. As long as the demand for housing exists, there will always be someone waiting in the wings to sell or rent to those looking. Home Buying is Too Expensive in LAInterestingly enough, homes in the LA area range in price from about $400,000 and up. Many of these homes in the lower price range are more modest and may not have all the bells and whistles you may get if you were somewhere else. Another reason LA residents and those moving into the area are looking for apartments over homes has to do more with astronomical prices than anything else. While apartments are more expensive than in other places, they’re still the most affordable housing option in LA. Salaries tend to be in a higher range due to the cost of living adjustments. The homes for sale in LA are still not affordable to most. The majority of houses that are purchased in the Los Angeles area are done so by those working either in the film and television industry or in the technology industry. Since housing costs are so high, individuals often turn to apartments and other less expensive housing types. You should keep in mind, however, that whether you choose to rent or purchase your apartment, you could still be paying a much higher price than you would if you were in another location. There’s Little to No Available Space to Build in LABuilding construction and landlords also have a direct impact on the price of apartment living in LA. There’s very little space available to build new buildings in LA. Los Angeles apartments tend to be on more of the expensive side since they are often built from already existing structures. This means that instead of tearing down a specific building, owners will often refurbish it and turn it into apartments. This typically happens instead of starting from scratch because much of the land that surrounds LA is already spoken for. This means that Los Angeles does not have anywhere that can be expanded to accommodate the many people choosing to move to the LA area. Since there is a limited amount of space available, it is important to note that developers are always looking for buildings that they can turn into apartments. With the demand for housing at an all-time high, they can benefit from developing new places for people to live. Final ThoughtsThe bottom line is that most big metropolitan cities like Los Angeles typically have a higher cost of living. This is especially true for those areas that also have a high tourist trade that draws people in to keep the economy going. Because the LA area is one of the “booming” cities that draw in tourists and those transplants from other parts of the country, there is a high demand for housing that is affordable. The unfortunate side is that houses that are for sale are so expensive that only the elite can afford to purchase them. Since this is the case, it leaves everyone else left looking for apartments that they can afford to either purchase or rent. Developers and property owners are often aware that the demand is there and, unfortunately, take advantage of the situation by increasing prices to levels that are unheard of in other cities. Remember when Los Angeles felt like a relatively affordable secret? Before New Yorkers brought their boiling-hot bagel discourse here and tech bros made Silicon Beach a thing? Apparently that version of L.A. feels like a distant memory to most of you, too. L.A. was just voted the most expensive city in North America, second globally only to Tel Aviv. That’s according to this year’s annual Time Out Index, in which we surveyed 27,000 city-dwellers around the world about the current state of their hometowns. Among L.A. respondents, a staggering 87% agreed that this city is expensive. And really, can you blame them? As much as we may love to trumpet our city’s wealth of dollar tacos and free museums, it’s hard to call L.A. affordable with median home prices nearing $800,000 and a gallon of gas hovering around $4.40. Maybe if those high costs provided Angelenos with perfectly-paved, traffic-free roads; clean, shaded sidewalks; and on-time, efficient transit networks the affordability failings wouldn’t sting quite as much. But instead, L.A. also won the dubious distinction of the most inconvenient city on the continent, a sentiment that a third of L.A. respondents shared (only Istanbul performed worse). With all of that in mind, you probably won’t be surprised to hear that L.A. was also voted the most overrated city in North America (just behind Bangkok globally). While we’ll certainly own up to those first two dishonorable mentions, we think there are too many amazing things about L.A. for that “overrated” distinction to stick. In fact, there were plenty of positives to come out of the Time Out Index, too, enough so to secure L.A. a spot as the 11th best city in the world: The vast majority of respondents consider L.A. diverse (the third highest in the world) and it also stands on the podium as the second-most-creative city on Earth. We happen to think that’s especially true after this past year and a half, when entire city blocks turned into art installations, holiday cheer went to the drive-through, mutual aid networks sprouted up on sidewalks and seemingly every parking lot became a drive-in. Scope out the full list of the 37 best cities in the world here.
Los Angeles is the second-most expensive housing market in the country, behind the Bay Area. It’s a situation, said Wall Street Journal and Economist contributor Lauren Schuker Blum, of “housing misery.” Blum was moderating a panel on what makes Southern California such an expensive place to live—and what, if anything, can be done to lower the cost of housing here. USC Lusk Center for Real Estate director Richard K. Green told a large crowd at the Petersen Automotive Museum that the problem is not endemic to L.A. None of the world’s 20 largest metropolitan areas have affordable housing. In Los Angeles, the ratio of median home price to median income is 7-to-1; a 4-to-1 ratio is in the neighborhood of affordability. “We’re really bad, but if you want to feel better, there are places that are worse off,” he said. That ratio is 25-to-1 in London, 20-to-1 in São Paulo and Beijing, and 18-to-1 in Hong Kong. However, said East LA Community Corporation president Maria Cabildo, there are cities that are doing much more than L.A. to address their affordable housing crises. Here, we created a housing trust fund, for example—but we never dedicated any money toward it. Curbed L.A. senior editor Adrian Glick Kudler said that there are lots of opportunities to make housing more affordable in L.A. For one thing, there is still plenty of land that can be built on. And we can also start building around transit in order to make dense living more practical. Despite L.A.’s need for more housing, the city remains hostile to development, said Blum. Green attributed this to misguided environmentalism and the region’s culture. There’s a tendency to think that being pro-development is bad for the environment, but that’s not necessarily the case. In a city with so much air pollution, more density—with people living closer to work and driving less—can be more environmentally friendly. Plus, L.A. is a single-family-housing city, where people want their own yard and pool. It may be the second biggest city in the country, but people here are accustomed to the single-family-house lifestyle. Cabildo said that there’s also a culture of Nimbyism in Los Angeles that makes building affordable housing particularly difficult. Councilmembers are too concerned about backlash to support affordable housing. Residents want their neighborhoods to stay the same. However, she believes that demographic shifts—the younger generation doesn’t necessarily want the pool but does want to commute by bicycle and public transit—could present opportunities for the city. How, asked Blum, did Los Angeles get so expensive? Green said that Los Angeles stopped being affordable in the mid-1970s. Part of the problem is Proposition 13, which froze property taxes and has discouraged people from moving. The law keeps the inventory of housing low—especially problematic as the population grew in the 1980s and 1990s. And, even at the height of the housing bubble, Southern California just didn’t build enough units to accommodate the number of people here. Cabildo said that in the same period that rents went up 25 percent in Los Angeles, wages decreased by 9 percent. In the past, you could have a job as, say, a grocery store worker, and have a nice house in the Valley. But that is no longer a good middle-class job, and that housing is no longer affordable. “Incomes are not growing,” she said, and it’s the middle of the market that’s “getting squeezed so tightly.” Why have rents gotten so high? Kudler said that buying a house has become “basically unattainable” except for people in the upper-middle class or above. The median cost of a house in L.A. is now nearly half a million dollars. At the same time, the housing crisis pushed a lot of people back into the rental market. Today, more than half of all Angelenos are renters. All that, combined with limited housing stock and the difficulty of building anything but the fanciest apartments, has driven rents way up. Where are people who are being pushed out of Los Angeles going? You hear about people moving to Texas, said Blum; are they really? Green said that the net migration from California to Texas is positive but still just a tiny share of the population of both states. There are certain groups that are leaving Los Angeles: The African-American population has been “dropping like a rock for the last 30 years,” he said. Many people who are priced out of L.A. are going to the Inland Empire, which has grown faster than almost any other place in the country. Yet there are no jobs there. So the people moving to San Bernardino and Riverside counties are often still working in Los Angeles and Orange counties—and dealing with miserable commutes. Is there anywhere in Los Angeles where first-time buyers can afford a house? Kudler said that she gets the question all the time, and it’s always impossible to answer. Highland Park is a place people often mention, but houses have started selling for a million dollars there. All the northeast L.A. neighborhoods are on their way to becoming unaffordable, including Boyle Heights. The Sears Tower project currently in development there which will have 1,000 apartments and no affordable housing units. “South L.A. is still reasonably inexpensive,” said Green—but it won’t be forever. He pointed to Brooklyn as an example of a place that was perceived as undesirable for years, then got tremendously expensive over the course of the last two decades. What can be done, asked Blum to bring rents and prices more in line with people’s incomes? Cabildo said that the amount of money available to build affordable housing in California has declined drastically over the past several years. The state needs to “look at additional sources to incentivize and pay for the construction of affordable housing,” she said. Some cities have put in place “linkage fees” that charge developers fees on their commercial, industrial, and residential development that are used to pay for affordable housing. This is one policy L.A. would do well to emulate, she said. Green disagreed, saying that subsidies don’t work well because they’re going to be small and because they make housing more expensive for everyone. Low-income Section 8 housing works well in most of the country, but it raises rents for the entire city in Los Angeles, San Francisco, and New York City. A better model, he said, is Hong Kong, which subsidizes the housing of 50 percent of its residents one way or another. This means that there’s housing for waiters, policemen, and other service workers—in a city where private-market units cost $1,000 per square foot—and that there’s no stigma attached to subsidies. What about building more high rises? That would help, said Green—but big, attractive cities are always expensive. And, said Kudler from her conversations with politicians and others, she knows that “nobody wants to abandon single-family housing in L.A.” The fact is: “There’s no political will for it. It’ll never happen,” she said. |