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September 3, 2007 at 10:14 PM #10162September 3, 2007 at 11:50 PM #83240sogonParticipant
I have no experience with this market however “figures are just a little over the rental cost with one important caveat–the market does not go down! ”
The market WILL go down. If you are trying to evaluate rent vs. owning, you have to consider property taxes, home owners dues etc.
“One of the sales persons I spoke with thought that the low end and the high end would hold up just fine”The sales person will always tell you what every you want to hear in order to get you to buy.
Have your son rent a unit for a year or two, after that if he still likes the lofts I’m sure the price will be even lower than it is now, or if the sales person is correct it will be about the same.
Also, I have lived in lofts in other cities, and much of the “charm” wears off pretty quickly. I have also lived urban areas that have been “cleaned up”, the clean up doesn’t persist into the night. Go by one of the areas at 3am and take a look around, do you feel safe? Is there any hookers, drug dealers, sketchy people around? While this may be acceptable, I would hear pimps yelling at their girls and other misc “unclean” activities.
September 4, 2007 at 6:14 AM #83245AnonymousGuestDowntown lofts are not ‘immune’ from declines in value, and are likely to be hit worse than most. Downtown LA still has very little to offer, and the lofts are overbuilt. Go down there at night and you’ll see that few of the lights are on in these buildings. Friend of my wife worked in a sales office for one of these recently, and said there were virtually no interested buyers.
Will downtown ‘revitalize’ in 20 yrs? Maybe, but I’ll bet it will remain mostly low-income
September 4, 2007 at 8:59 AM #83263PadreBrianParticipantRent.
September 4, 2007 at 9:30 AM #83267orthofrancisParticipantMy wife and I have followed this area for a year. It’s tremendously overbuilt right now, and so we’re holding off on buying for a few years there. We’ve seen many of the newer places not sell their, or the same listings for many months now. We rent a 1250 sq foot place 2b/2b, with pool, workout room, and allows dogs for 2500/month. The time to get in early on those properties has passed already.
Warning – some of the condo buildings/reuse buildings don’t even have parking in the structure – it’s rented out from other buildings. That can change in a second. Also, one place we looked at with a nice view, but didn’t get, already now has a new building going up, which will totally block it’s dowtown view.
September 4, 2007 at 6:10 PM #83352LA ReaderParticipantI would say Downtown LA Condos are the worst thing to get into right now.
I used to work downtown and love the lofts that were going up 5~7 years ago. Back then the prices made sense and there weren’t a lot of nice lofts. But now if you drive around Downtown LA you’ll notice many many buildings in the process of being turned into “Luxury” condos. I’d say there are about 8~10 condo buildings comming into market in next two years.
And we’ve been talking about Downtown LA being cleaned up for the last 7 years. And to give credit, it is better. But it’s still no where near safe enough to live without worry. The area is still home to 20,000 homeless people. And they are not going anywhere. (if you can come up with a good place to dump 20,000 homeless people, I’m sure LA City Counsel would love to hear it.)
It’s a cool place to live for single males or young couple with no kids if your condos has a parking inside the bulding with 24/7 security. But how many single males and young couples can afford $350,000 and up 800sq foot condos that they will need to move out of as soon as they get to the next stage of life (kids).
The only thing that can possibly give any hope of price not going down in downtown LA is the construction of the new mall next to Stapes Center & Convention Center. But I’d say the price of Downtown LA Lofts holding up are minimal. I think Downtown LA is the riskiest place to put your money in LA area.
September 4, 2007 at 7:10 PM #83361BugsParticipantLA has been lagging SD all through this entire economic cycle. It started late and it’s ending late. It’s still going to happen though.
If you want to know what a nouveau urban downtown that gets overbuilt looks like just look at what’s happening in SDs downtown. There’s more money in LA but there’s also more alternatives.
September 5, 2007 at 12:28 PM #83447VanMorrisonFanParticipantConsider quality of life…
Downtown San Diego is a paradise compared to Downtown LA. San Diego is right on the ocean. You can stand in the Gas Lamp District and smell the salt of the ocean air. I have done it. Downtown SD has movie theaters, great restaurants, Horton Plaza, Border’s Books, a Ralph’s Supermarket, and a lot of other neat things. It’s a great place to walk around – or at least much better than Downtown LA. Traffic is bad, but not nearly as bad as Downtown LA. If I had to live in a downtown, San Diego would be way higher on my list than Downtown LA.
Downtown LA is a hell-hole of a place. High-rise and concrete hell, and there is no other way to say it. On hot summer days the ocean may as well be 100 miles away, the smog is unbearable, and there are almost no amenities to speak of. The high rises block out almost any breeze, and all the asphalt and concrete reflects the heat back up. They are just now getting a supermarket. It’s no accident that both the men’s and women’s jails are in Downtown LA. It’s an excellent deterent to crime because the only thing criminals fear more than being in jail is being in a jail in Downtown LA.
September 5, 2007 at 12:40 PM #83450BugsParticipantOn the flip side there is more money in downtown LA than in SD and salaries are a lot stronger.
The urban development pattern of building up was the model of the 19th century, back when transportation was an issue. It was mostly an east coast situation, except for San Francisco. Most people lived in those areas because that’s where the jobs were and commuting wasn’t an option.
The other metro areas of the midwest and west coasts have followed the suburban sprawl pattern of development, which has its own downsides. However, the reason for sprawl is because people have preferred being spread out to living in the downtown areas.
Suburbia is a choice that remains very popular today, and I really don’t see a large percentage of Americans volunteering for the urban lifestyle. Some people may choose it for certain limited periods of their life, but most won’t embrace it as a long term lifestyle. We may force some people into the downtown areas because of the higher costs of living elsewhere, but I can’t see there ever being a waiting list to get in downtown.
September 5, 2007 at 2:56 PM #83473AnonymousGuestYes, money is pouring in to that area right now, and it looks like it is getting revitalized. However, at 2 AM the streets are still full of sketchy people.
Go down there at night and you’ll see that few of the lights are on in these buildings. Friend of my wife worked in a sales office for one of these recently, and said there were virtually no interested buyers.
I agree. I was at the J Lounge a couple weeks ago. From the patio you can see a bunch of new projects, some being built and some already completed. From my view, I saw about 3 lights on in the whole face of a 12 story building…doesn’t seem link booming business to me.
I’d say, rent for a while and see what happens.
September 5, 2007 at 5:24 PM #83516cashmanParticipantBugs, I have the same thoughts that you have that people would prefer to live in the suburbs rather than in an urban setting, but a few weeks ago I read this article in the LA times real estate section about how in the latest survey, the majority of gen y and some gen x ers prefer to live in an urban setting, close to their work, in multi-family units, such as condos or lofts, where they are close to their friends. They want to literally be able to walk out of their front door, go have dinner, mix with friends and maybe take some form of mass transit to work. It just blew me away. So when my son, who’s going to be starting school in LA soon, suggested looking at lofts, I decided I’d better at least have an open mind.
September 8, 2007 at 10:20 AM #83862LA_RenterParticipantHere is an update for Aug home sales in L.A from the LA Times blog. I don’t think that San Diego experienced anything like this. I guess you can rely on that old saying “the bigger they are the harder they fall”. If LA goes into a very hard landing recession it will feed into San Diego’s downturn, you may have another shoe to drop. I would be very leary about those lofts right now
“LA sales down 50% in August
News item: The first look at August home sales in LA County shows sales dropped by 50% from year-ago levels. That is not a typo — half the sales market disappeared.Los Angeles Business Journal: “The expanding morgage crisis and credit crunch slammed the Los Angeles housing market in August, with home sales plunging 50 percent from the same month last year and 25 percent from July … The pain was widespread, as only a handful of the county’s nearly 300 ZIP codes managed to eke out any sales gains … August’s median sales price dropped slightly from its record July level to $579,000.
More: “Everything was great until about a month ago,” said Beverly Hills realtor Syd Leibovitch. “Then,on one day — Thursday August 9 — everything changed as lenders shot up rates on jumbo loans to 9 percent and further tightened guidelines … It became almost impossible to find a jumbo loan.”
Our take: We wonder if a drop-off like this is unprecedented — anyone out there remember a month when the market dropped this sharply — 25% from the previous 30 days? 50% from the previous year’s level? We only ask because we’re starting to believe the current downturn may not look like previous slumps. Yes, California real estate is cyclical, but as Countrywide said yesterday, this cycle is different.”
http://latimesblogs.latimes.com/laland/2007/09/la-sales-down-5.html#comments
September 8, 2007 at 4:43 PM #83886cyphireParticipantCashman… In an economic downturn (recession – brutal recession?) that area is going to be ugly. Gentrification comes from a shortage of inventory at reasonable prices….
Coming from NYC, the “Alphabet City” area was about as nasty as it could get in the 70’s… The 80’s were still awful… 90’s and recently its a yuppified area – the vagrants were pushed out. Manhattan is a small brutally expensive market which has still seen price increases. LA isn’t the same deal.
The difference is that as the economy gets worse the potential gentrified areas stay stagnant and the investors don’t sink any more money in. A lot of people are left holding the bag. I believe that prices will go down for years – and the same potential buyers will spend their money on better areas which could hold value. Crime will start going up as jobs get cut. Always happens. I would hate to be in downtown LA over the next 10 years.
Just my opinion!
p.s. I love the urban lifestyle
September 9, 2007 at 7:16 AM #83912speedingpulletParticipantI have friend who lived in downtown loft a while back (rented) and told me that, yes, the loft was very nice, but Downtown L.A is deserted after dark.
Once the Suits have gone home, there’s very little in the way of resturants and other social amenities – the streets are quiet but for the many, many homeless people. Not that I have anything against homless people, but tripping over people sleeping in your doorway when you come home gets a bit tired after a while.
They’ve been trying to ‘gentrify’ downtown for years now, with dissapointing results – despite a lot of lofts/condos being built/converted, the place is still basically a financial district. Like most financial districts worldwide, they’re great during working hours, but turn into ghostowns once the workers go home for the evening.And, lets not forget the amazing amount of traffic going through Downtown every day – if your son needs to get out of the City he’s going to be fighting traffic in every direction. Most Angelinos will gladly bypass the Downtown area if they can, because they know once they near the Staples Centre on the I-10, they’re going to have to deal with the horrendous traffic going both in and out of Downtown at all hours of the day.
Cashman – where is your son going to school? L.A colleges are spread all over – is he going to USC? UCLA? Pepperdine? You might be better served by looking at the local markets nearer his school.
And, I’d echo others in saying that buying ANYTHING in L.A at the moment would be financial suicide – despite what the MSM says. Prices here are very sticky, and L.A is still has some of the most unaffordable prices in the country.
If he’s dead set on living in Downtown, despite all the drawbacks, then please persuade him to rent a loft for a year before putting good money down for a place. You never know, after a year he’ll have gotten bored with the problems, and will want to move somewhere else in the L.A area.
Just my tuppenceworth.
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