by Jodi Summers
Based upon the demographics, we should be in the midst of a huge housing boom. While rental markets are strong in many areas, on a percentage basis, young people are not flowing into the marketplace as previous generations.
“It is true that as the economy recovers, faster household formation should create demand to occupy the new units,” observes Luis Mejia, CoStar Director of U.S. Research, Multifamily. “But relatively easy apartment financing and prolonged developer optimism have created a supply wave that could adversely affect rents and vacancies — even in places where today’s economics and demographics are apparently favorable.”
Certainly that’s what’s created the stability in the Westside of Los Angeles apartment market. In the past year, the median price per unit jumped 10% to $236,100 per unit. While unit prices are up, average cap rates are down slightly, but still hovering in the high-4% range. Rising interest rates will have a pronounced affect on the Westside Cities region due to razor thin margins. Already the number of deals being done in Santa Monica and Beverly Hills has slowed significantly.
Westside sale and rental rates are also seeing an impact due to the high unemployment rates for those under 30. Experts say there are “8.2 million young adults ages 20 to 24 who can’t find full-time employment, including 4.1 million who are disconnected from both work and school and another 3.6 million who are working part time when they want to work full time.” For college graduates in this age group, the unemployment rate is double what it is for those in their 30s and 40s.
Studies show there are “4 million young adults who are not engaged in any sort of activity to develop their human capital; they are not gaining education in school, nor are they learning skills or getting experience through work.”
Millennials are moving back in with mom and dad in staggering numbers. In the past, when young people first went to work, they would buy a car and start saving for a down payment for a home. For the 8.2 million who can’t find full-time employment, these choices are not an option. As a result, many of our young people will be stuck either at home or in a rental since they can’t afford a down payment on a house. If they have children it will be even more difficult to save the money for a down payment. This means the demand for rental property will be high and that fewer millennials will become property owners in their 20s or early 30s.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – firstname.lastname@example.org or 310.392.1211, and let us move forward together.
Amsterdam has been meeting a pressing need for student and other low-income housing by using ubiquitous steel shipping containers. After years at sea, the containers were rusted and dented but ready for reuse to house people instead of products. Can we do the same in Los Angeles?
Shipping container architecture has evolved as a form of architecture using steel intermodal containers (shipping containers) as structural element, because of their inherent strength, wide availability and relatively low expense. A container is often referred to as a TEU, or twenty-foot equivalent unit. A standard TEU is approximately 20 feet long and 8 feet wide. The most common height is 8 feet 6 inches, an ample ceiling height.
Currently, an estimated 21,000 shipping containers arrive in the United States every day. Retired shipping containers are abundant in the United States. Port authorities estimate that over 700,000 used shipping containers are stockpiled on prime waterfront real estate without a significant use, purpose, or typical method for disposal, making them ideal construction modules.
Made of steel and wood, this product is stronger than conventional framing, stackable for creating levels and is readily available. Cargo containers are a rather perfect sized box for building.
Shipping containers have been called an ideal building material as they are designed to carry heavy loads and to be stacked in high columns. They are also designed to resist harsh environments – such as on ocean-going vessels or sprayed with road salt while transported on roads. As all shipping containers are made to standard measurements and as such they provide modular elements that can be combined into larger structures. Construction involves very little labor. As they are already designed to interlock for ease of mobility during transportation, structural construction is as easy as stacking more containers. Containers can be stacked up to 12 high when empty. They also keep building costs way down. Containers may be purchased from major transport companies for as little as US $1,200 each. Even when purchased brand new they are seldom more than US $6000.
Many apartment buildings and other structures based on shipping containers have already been constructed, and their uses, sizes, locations and appearances vary widely. In 2000, the firm Urban Space Management completed the project called Container City I in the Trinity Buoy Wharf area of London. The London docklands development is composed of environmentally friendly work studios and live/work lofts stacked on top of each other to create a 5-story building.
Architect Nicholas Lacey and Buro Happold created a flexible design system that relies on component pieces instead of units. Instead of using a 1 container = 1 unit approach, their system relies on components in various permutations to create very livable, adaptable spaces. Aside from this Container City residential project, the system has been used in projects as diverse as classrooms, office spaces, residential units, retail spaces and even youth centers.
“Containers as architecture are just one of the ways in which we can look at objects and find new uses to them. The modular nature of the containers, their adaptability, and the fact that they can be found in industrial surplus make them an ideal prefab material,” noted Urban Space Management.
When Chicago was built, the city had a clean slate. In 1871, the Great Chicago Fire broke out, destroying an area of about 4 miles long and 1 mile wide – a large swath of the city at the time. It was a city planner’s dream and set the precedent for worldwide construction. They developed a world class downtown with exceptional architecture – a brilliant blend of business and residential without getting into a car. Fine urban living, if you can manage it through the harsh winters.
The destruction caused by the Great Chicago Fire led to the largest building boom in the history of the nation. In 1885, the first steel-framed high-rise building, the Home Insurance Building, rose in the city as Chicago ushered in the skyscraper era, which would then be followed by many other cities around the world. Today, Chicago’s skyline is among the world’s tallest and most dense.
Chicago was integral to two architectural movements. It gave its name to the Chicago School and was home to the Prairie School. Large swaths of the city’s residential areas away from the lake are characterized by brick bungalows built from the early 20th century through the end of World War II. Chicago is also a prominent center of the Polish Cathedral style of church architecture. The Chicago suburb of Oak Park was home to famous architect Frank Lloyd Wright, who had designed The Robie House located near the University of Chicago as well as many prominent buildings across the country.
Unlike many Midwestern and East Coast cities, Chicago tends to have wider streets. A positive effect of this is that it alleviates the feeling of being engulfed by the city’s large skyscrapers. Most of the city’s residential streets also tend to have a wide patch of grass and/or trees between the street and the sidewalk itself. This has the effect of keeping pedestrians walking on the sidewalk further away from the street traffic. Chicago’s Western Avenue is the longest continuous urban street in the world. The City Beautiful movement inspired Chicago’s boulevards and parkways.
Enjoy more photos of Chicago @http://www.flickr.com/photos/jodisummers/sets/72157634440136595/
CBPA is a founding member of a coalition that has banded together to provide education and information about the problems related with eviscerating Proposition 13. The group is named Californians to Stop Higher Property Taxes. On your behalf, our coalition provides a website with lots of good resources for news and information related to attempts to increase your property taxes, including academic studies that show the negative impacts a split roll would have on California’s economy. Click here to visit the CSHPT website.
by Jodi Summers
People in Los Angeles are going to be renting for a long time. Did you ever calculate how long you have to work and save in order to afford a home? If you did, you understand why everybody’s renting. Here’s a nifty little chart courtesy of The Atlantic Cities to help you calculate the numbers.
Enjoy figuring out how many years it takes to save enough for a down payment in Los Angeles or any of the 100 largest U.S. metro areas. The statistics come from factoring in local average wages from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages as well as local housing prices based on the median asking price per square foot of homes listed on Trulia.
The study estimated that people saving for a down payment set aside 10% of their pre-tax earnings and will earn an annual return of 1.5% on those savings. They assumed a 20% down payment, the minimum you can put down without paying insurance on your mortgage.
Notice that affordability varies hugely across metro areas. Sure, individuals have the potential to earn more money in most metros with higher housing costs – but those high wages usually aren’t high enough to offset the even higher housing costs. Among large metros, average weekly wages range from $655 in El Paso to $1809 in San Jose – almost three times as much. But median price per square foot runs from just $46 in Detroit to $459 in San Francisco – nearly ten times as high.
As you can see from the table below, in Los Angeles County, you’ll need to work 15.5 years in order to save enough for a 20% down payment on a typical 2,000 square-foot home costing $236 per square foot….It takes even longer in Orange and Ventura Counties….not to mention Santa Monica, were last month the average sale price is $660.38 per square foot for single family homes and condos combined. So, how long does it take to buy a home in the L.A. area? You do the math.