
‘Sticker Shock’ in Los Angeles Housing - prostoalex
http://www.nytimes.com/2016/09/27/us/california-today-los-angeles-housing-costs.html?em_pos=large&emc=edit_ca_20160927&nl=california-today&nlid=4617603&ref=headline&te=1
======
mixmastamyk
Yep, our days here are numbered. Every thread on our community FB group has a
hordes of people fighting any new construction (including housing) tooth and
nail, even on lots filled with stripmalls, decrepit crackhouses, or asphalt
parking, keeping LA decidedly third-world--it boggles the mind.

Our rent went up 7% this year alone.

~~~
rcthompson
I wonder if this is a general problem, where property owners in an area have
both the power to influence the local government's land use policy and an
incentive to limit new construction in order to create artificial scarcity and
drive up the prices of their own property. Is this guaranteed to exacerbate
any housing shortage anywhere'

~~~
friendlygrammar
Direct democracy doesn't work.

~~~
Iv
Yeah, look at the chaos that is Switzerland: one of the best life expectancy
and education in the world, with so low taxes that rich French move there to
pay less.

~~~
mixmastamyk
A lot of things that work in the small don't scale.

~~~
Iv
This is exactly what the opponents of democracy said during the 18th century,
and exactly what China says now "we are too big for democracy".

But well, we have a proven implementation at 8 million people. Let's promote
it to all countries of that size or smaller then.

------
surfmike
When people say "30% of your income is spent on housing," do they usually mean
pre-tax or post-tax?

The article claims you need $145K a year to afford a $2000/month apartment.
But assuming that you lose 40% to taxes, you would still be left with $5,250 a
month _after_ housing. That sounds a lot higher than it should be for the
lower limit of affordability.

If you assume 30% of pre-tax income, and $2000/month rent, you get a required
income of $80,000 -- still high, but not as outrageous as the figure he comes
up with.

~~~
harmmonica
The article says post tax but the standard is closer to what you're saying.
For a landlord renting a property, for instance, the safe rule of thumb is
typically for your tenant to have a gross _annual_ salary of 40x the _monthly_
rent (which for a 2k rental would be 80k gross salary). Using 145k is way too
conservative. Similarly, when buying a house, the debt-to-income ratio is
calculated on gross (pre tax) income as well and is 28% for housing costs
(principal, interest, taxes and insurance), which lines up pretty well with
the standard rental calculation.

~~~
irrational
Huh, maybe it's time for my family to move on up since my gross annual salary
is 80x my current housing payment.

~~~
jdavis703
Well there goes your retirement savings... (Assuming that's where your extra
money was going).

------
s0uthPaw88
I love living in Los Angeles as a single, 20 something, but the thought of
trying to raise a family here terrifies me. The median price of a 3 bedroom
home is $865,000 which would mean that a large portion of my long term net
worth would end up tied to a single asset. When it comes time to put down
roots, I'll head to cheaper pastures.

~~~
nawtacawp
Colorado is calling.

~~~
costatus
Colorado is full thank you to move somewhere else and transform some other
state into california.

~~~
biocomputation
Native Washingtonian.

We're also full.

~~~
int_19h
Native? Which tribe are you from?

~~~
biocomputation
Here's the Merriam-Webster definition in case you don't know what native
means.

[http://www.merriam-webster.com/dictionary/native](http://www.merriam-
webster.com/dictionary/native)

Is there a reason you raised the issue of race? Does my race matter? If so,
I'd just LOVE to see you explain why.

~~~
int_19h
Your race doesn't really matter, no. But neither does your native-born origin.
You don't get to lay an exclusive claim on the arbitrarily defined
geopolitical unit on the basis that you happened to be born there.

~~~
biocomputation
Except you wrote:

>> Native? Which tribe are you from?

Then you wrote:

>> You don't get to lay an exclusive claim on the arbitrarily defined
geopolitical unit on the basis that you happened to be born there.

Why won't you just tell the truth: you don't like it when _some_ people lay an
exclusive claim to a geographical unit on the basis that they were born there,
but you're fine when other people do it, provided YOU get to make the rules a
la: "Native? Which tribe are you from?".

BTW, there's a word for what you're doing. It starts with H.

~~~
int_19h
It was a rhetorical question to invite further discussion. Your assumptions
about where I wanted the discussion to go from there are just that,
assumptions.

And no, I don't believe that Native Americans have such rights, either. But
since you sounded like you believe that _you_ do, it was a comparison that
practically begged to be made.

~~~
biocomputation
Are you that guy from the UK? I think we've had this conversation before.

~~~
int_19h
No, I'm a guy from Russia who lives in US. But I'm sure you had that
conversation before - it's not exactly uncommon :)

------
sv7n
B-build A-absolutely N-nothing A-anywhere N-near A-anything

------
carsongross
Nominal interest rates are zero. We are living through the largest debt bubble
in history. How is it surprising that assets are all incredibly overpriced?

Yes, of course it will end in tears.

~~~
shostack
But what would cause it to pop? There is still insane demand in popular areas,
in large part because that's where the jobs are. I could only see that
becoming more true in a down market.

~~~
atemerev
You have answered your own question — it will pop when jobs stop growing.

~~~
carsongross
Yep. And it will be reflexive, since the debt was loaned out against future
production, exacerbating the downturn.

Some cities might become safe havens for Chinese wealth, not much individuals
can do about that except wait it out and hope that the US government starts
working in the interests of its broader population, rather than the already
rich landowners in a few cities.

At a higher level, this is why privately issued debt is no way to manage your
money supply.

------
mdorazio
As someone who has been in LA for a while, I think the "sticker shock" isn't
coming from the housing cost so much as from the salaries that aren't keeping
up with it. If you want to live in a nice location with a short commute then
you're going to be paying over 1600/mo for a 1 bedroom. But if salaries were
at Bay Area level that would be a bargain, especially given the weather, beach
access, night life, etc. that LA offers compared to other cities.
Unfortunately, salaries here are not great, even in the small tech scene on
the west side.

------
Simaramis
Its a silly attitude to deny development. There is plenty of room for more
people, on the planet, in LA.Just get organized.I live in Venice but friends
in Hollywood I see maybe 4 times a year because driving is numbing. Robocars
are gonna improve things greatly.That said, LA is full of itself.You will pay
through the nose for property that shouldvbe torn down, yet you are not
allowed to. I am a Euro transplant and I have travelled the U.S.for the past
dozen years and there is hardly a bad spot anymore.You get great food,
culture, people many many places. Madison WI, Bozeman, Raleigh, Detroit even,
even Texas. Lot of people are stuck in LA molasses.

------
happytrails
I'm looking to buy in LA and everything is old as shiz and over 800k :(

Oh well, at least I can rep the 323 and shout tupac lines

~~~
seanmcdirmid
Bargain hunting in Compton?

~~~
gjolund
My friend just bought a 2 bedroom in Compton for $600k.

I didn't have the heart to tell him his mortgage will be underwater in a
couple years.

~~~
eiliant
elaborate?

~~~
xienze
It's a house. In Compton. That cost $600K.

~~~
smrtinsert
If it looks like insanity its probably genius in real estate.

------
taternuts
Having just moved to the Playa Vista area, $2,000 for a 2 bedroom seems like a
steal

------
geggam
LA is cheap

Come to the SF Bay area...

~~~
ksenzee
Let's not pretend because SF has problems that nobody else's problems are any
big deal.

~~~
jfoutz
Kind of a tangent, but isn't the Los Angeles area much more populous than the
bay area?

Sure the problem might not be quite as severe as SF, but it affects 2.5x the
number of people.

~~~
enraged_camel
LA has more people, but also much more land. The entire stretch from SF on the
other hand is surrounded by water on three sides, and the valley in general
is... well, a valley. Surrounded by mountains.

To get a good sense of this, open Google Maps and center it on California.
You'll get a sense of how different the two areas are in terms of sprawl. LA
is basically one big concrete jungle from Burbank all the way to Anaheim. SF
area is much more densely packed.

~~~
jfoutz
I've visited both, but lived in neither. Yeah, SF itself isn't even a million
people, LA 3.4 million. The bay area gets up to 7 million, but greater LA is
18 million. SF did feel much denser.

The sort of standard answer is just build more housing, but the cities are
already so congested. Building up would surely lower prices in both cities,
but i think it'd make bad commutes worse.

I dunno. If there was an easy answer, people would just do that. For a long
time the easy answer was just drive farther. That's becoming less of an option
now and it's not clear what, if anything, should be done.

In any case, it's easier to convince 100,000 people than it is to convince a
million, and it's easier to convince a million than it is to convince 10
million. Whatever the answer is is going to take some serious politics.

~~~
ssalazar
> The sort of standard answer is just build more housing, but the cities are
> already so congested. Building up would surely lower prices in both cities,
> but i think it'd make bad commutes worse.

Build around public transportation and fix zoning.

> In any case, it's easier to convince 100,000 people than it is to convince a
> million, and it's easier to convince a million than it is to convince 10
> million. Whatever the answer is is going to take some serious politics.

Sigh, yes.

------
droithomme
> What does it take to be middle class in Los Angeles? That was the question
> Ross DeVol started out asking himself when he began calculating how much a
> resident would need to make to spend 30 percent of earned after-tax income
> on rent for a two-bedroom apartment in Los Angeles County.

I disagree with the author that this is middle class. A two bedroom apartment
is the very definition of impoverished lower class loser, just above homeless.

Middle class means a detached 3 bedroom in the suburbs, with biweekly maid
service, two financed cars, health care to the point you don't need to worry
about it at all, and buying whatever you want at the supermarket.

What middle class does not include is any one of: a mansion, live in staff, a
yacht, full time nannies instead of occasional baby sitters, swiss boarding
school for the children, a groomsman for the horse, a pool boy, a cabana, a
private plane, or zero income tax.

This is what skilled factory workers and teachers had in the 1960s, 1970s, and
1980s. Above them, designers, engineers and lawyers, comprised the upper
class, or upper middle class.

~~~
applecore
By your definition of the middle class, a healthy U.S. economy would need
approximately 4,000,000 domestic maids to satisfy the biweekly maid service
requirement.

~~~
droithomme
It is a lot of good jobs that pay fairly, do not require skilled labor, post-
secondary education, or high IQ, and is not difficult, strenuous or dangerous
work.

I have certainly done this same work myself. It is an excellent position for
people without many skills and/or the desire to pursue education. And it is
not an appropriate use of time for those of us who do have more skills.
Therefore it is highly reasonable and efficient to outsource these tasks to
those unable to make things or to design things, and/or not motivated for
whatever reason to seriously pursue and master such tasks.

