25
Dec
2019

Sky-high prices leaving homes out of reach for many

first_img With high demand and tight supply, experts say, prices can only go up. More importantly, some experts say, Southern California hasn’t built enough housing to supply the middle-income folks – the firefighters, teachers and $40,000-a-year workers – particularly in the western half of the region. “We can’t build enough houses at the right price for the majority of people,” said Bill Rattazzi, president of John Laing Homes’ LA/Ventura Division. Rattazzi has lost about 10 percent of his workers, among them receptionists and middle managers, who moved out of the region in order to afford their American dream. That concerns Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., who said that continued high home prices could make it difficult for some businesses to relocate to Southern California and for existing employers to recruit qualified workers from outside the area. And, the region could start losing some of its skilled young people, who decide to move to Arizona, Nevada or other states where they can afford to buy a house. “Is there anything being done to solve the problem? The answer is no. We’ve boxed ourselves in. All we can develop is high-end stuff. It’s a real concern,” Kyser said. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREThe top 10 theme park moments of 2019 Some, like Christopher Thornberg, author of a quarterly economic forecast from UCLA’s Anderson School of Management, figure Los Angeles is overpriced by 30 percent. People are buying and paying more than they would if they rented the same house because they expect home prices will keep going up. He expects prices to go flat or make a slight decline. Recent homebuyers may not necessarily lose money – they just got 10 years’ worth of appreciation in two years. Others believe Southern California prices will continue to be high as long as home construction does not keep up with population growth in the region. Southern California added 318,014 residents last year, but built only 111,019 new houses and apartments – that’s roughly 6,700 units short of what the region needs, according to the Building Industry Association of California. And Southern California is still lagging from a dramatic decline in home construction in the 1990s. Three-hour commutes, million-dollar tract homes and no-income, interest-only loans – is this the new American dream in Southern California? Back in 2000, real estate experts predicted higher home prices – but nothing like the 10, 20 and even 25 percent annual increases that resulted. In some areas, homes jumped $100,000 in one year. And those ever-increasing prices accelerated the buying frenzy and amplified the sticker shock. “There is this sense that there’s a ship moving out and a lot of people are willing to do a lot to get on it and the people who haven’t gotten on are embittered and waiting and wanting the ship to hit an iceberg,” said Hans P. Johnson with the Public Policy Institute of California. Real estate economists differ on whether Southern California is overpriced and perched atop a bubble – liable to pop or slowly deflate in the near future. last_img

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