To live and buy in L.A.
IF Southern California's housing market of the last six years were a hit song, owners who have seen their homes double in value would be humming "We're in the Money." But for countless others who can't afford to buy or to pay rising rents, the flip side of the record would be "Desperado."
Despite political strides -- Los Angeles last fall fully funded for the first time a $100-million affordable-housing trust -- and the construction of new homes in all price ranges, the region's persistent housing crisis has only gotten worse, experts say. Record-high home prices, unflagging demand, population growth, lack of developable land, sky-high land and building costs and government regulations have exacerbated the situation.
"The problems that were signaled in 2000 are cemented now," said Henry Cisneros, chairman of the housing development firm CityView and former secretary of the U.S. Department of Housing and Urban Development. "It's built into the DNA of California, and we're getting farther behind every day."
Middle-income residents have been particularly hard-hit by high prices and a limited housing supply. The failure of cities to invest enough money in housing and the lack of smart-growth planning have compounded the problem, said Los Angeles Mayor Antonio Villaraigosa.
"We've had a diaspora of the middle class from our city," Villaraigosa said. "We've got the infrastructure, and we must provide the housing to grow our economy and support our middle class."
Only 12% of households in Los Angeles County, for example, can afford a median-priced home, according to the California Assn. of Realtors' most recent statistics, compared with about 38% in the summer of 2000.
Considering the record run-up in prices, it's no wonder. The median price for a home in Southern California in April 2000 was $201,000, compared with $485,000 in April 2006. In Los Angeles County, the median price rose from $195,000 to $508,000; in Orange County, from $262,000 to $628,000, according to DataQuick Information Systems, a La Jolla-based research firm.
The situation probably will not change anytime soon. In the last 62 years, there has been only one significant downturn in home prices, and that was between 1990 and 1996 -- amid an exodus of defense-industry jobs -- suggesting that a sustained decline is rare, said Michael Carney, finance and real estate professor at Cal Poly Pomona.
