Navigating the LA Housing Market

Don't let double-digit unemployment and a frozen credit market fool you - some LA neighborhoods are doing just fine, thank you. And you might be surprised by the areas that are doing particularly badly. How has the recession affected gentrifying neighborhoods and the up-and-comers? And are the super-rich truly still recession-proof? Los Angeles Magazine has just published a chart detailing homes sold, median selling price, and price per square foot for every imaginable LA area neighborhood between 2007 and 2008. The list can be quite daunting so herewith, a summary of the notables.

Most houses sold in 2008: Lancaster (93536) 1,458

Least houses sold in 2008: Downtown (90021) 16

Highest median price in 2008: Beverly Hills (90210) $2,690,000

Lowest median price in 2008: Lancaster (93535) $155,000

Highest price/sf in 2008: Santa Monica (90402) $984

Lowest price/sf in 2008: Lancaster (93535) $88

Biggest gainer from 2007: Westwood (90024) +17.9%
Biggest loser from 2007: Watts (90002) -49.0%

Wow. It is certainly an interesting time to be owning (or building) in Lancaster. Despite nearly halving in value from the year before, houses were still getting scooped up there last year thanks to drop-dead prices, which were lower even than Compton or Watts. But those inner city neighborhoods were by far the biggest losers from the year over. Their central location gives them artificially high prices during boom years. Beverly Hills and Malibu topped out the price index as can be expected. And Santa Monica's dense zoning and oceanfront location gave it the highest price per square foot. Despite sluggish movement in Downtown, the 90021 zip still managed a double digit increase from 2007. And the combination of density and stability stemming from proximity to UCLA, is the only explanation for Westwood's freakish mini-boom.

Biden: California Rail a 'Priority' for Federal Funds

Vice President Joe Biden announced to reporters earlier this month that California is especially well-prepared to receive a chunk of the $8 billion of stimulus money that has been earmarked for high-speed rail. Earlier this year, President Obama identified 10 regions nationwide that could benefit from high-speed rail. But because California voters approved $9 billion in state bonds last November, Biden believes the state is well-equipped to receive at least 10% of those funds.

The first phase, which is to run from Anaheim to San Francisco, will cost upwards of $34 billion and construction will last at least 10 years. But the ultimate vision of the plan is a $45 billion, 800-mile network linking San Diego in the south to Sacramento up north. Not only does California high-speed rail have the backing of its voters, it has long-running support from Governor Schwarzenegger and the legislature, and is in advanced planning stages... which is much more than most states can say. Biden, who has been dubbed 'Amtrak Joe' for his vibrant support of rail, added that the administration wants to "get shovel-ready projects out the door as quickly as we can."

But because of the pressing need of improved transportation and construction activity, and the lengthy red tape federally-funded projects must wade through, two segments of the proposed line under considerably high demand might be contracted out by 2012 and open for riders by 2017. These segments are the $3 billion run from Anaheim to Los Angeles and the $4+ billion run from San Jose to San Francisco. This second segment is particularly controversial because it is proposed to run along an existing commuter rail right-of-way and through some very dense, primarily affluent areas. According to the Wall Street Journal, Florida is the other leading candidate for federal money.

LA Tops Forbes' List of Overpriced Cities

Thanks to inflated home prices, an astronomical cost of living, and embarrassingly high unemployment, Forbes magazine slapped the City of Angels with the number one spot in its 2009 list of "America's Most Overpriced Cities." The list was calculated using a combination of 4 measures: average salary for college-educated workers, unemployment rates, cost of living, and the Housing Opportunity Index, which measures a median income family's ability to purchase a home locally. Other California cities on the list were Riverside (#6), San Diego (#9), and San Francisco (#18). Chicago, Miami, New York, and Providence rounded out the top five.

At 10.3%, unemployment in Los Angeles is one of the highest of American cities. In the last two years, residential building permit rates have dropped 82%, and the unemployment rate of construction workers is now 21%, almost double what it was last year. And despite the median home price having plummeted almost 40% from $525,000 to $319,000, the cost of buying a home still ranks among the highest in the country. Only NYC, Long Island, and San Francisco score worse on the Housing Opportunity Index.

And in an attempt to soften the blow and gain hip hop credibility, Forbes even references late rapper and convicted sex offender Tupac Shakur. Frustrated with the high cost of living back in 1996, Tupac proclaimed he would almost rather "live life in the pen," according to the magazine. Were he still alive today, Tupac would likely have little trouble finding a nice pad with $15 million in annual royalties.

Flagship South Pas Redevelopment Stalled

Shamrock Holdings, the chief financier for a major mixed-use redevelopment project in downtown South Pasadena, has pulled out, citing economic concerns. Developer Decoma, was relying on the $8.8 million in equity pledged by Shamrock for the $50 million plus project. The 310,000 sf project was to be the flagship property in a major revitalization of the central business district along Fair Oaks Ave. But the unavailability of short-term construction loans in the midst of a development-unfriendly economic climate forced the Burbank holdings company to pull out.

The development was to contain 60 condo units, including 12 affordable units, and underground parking for 380 cars. The Decoma plan was attractive to the community because it was aimed at smaller scale retail. Community members looked forward to public plazas, water features, and street furniture to help improve a neighborhood where blocky bank buildings and 'For Rent' signs have become the norm. It is unclear whether Decoma Developers, whose website includes an extensive description of the project, will stick through despite the financial setback.

The city and the chamber of commerce certainly hope they will. The project was approved by the city council in May 2008. Since then, civic leaders have been courting developers and financial sources, begging for investment in their "blighted" CBD. Scott Feldmann, president of the chamber of commerce, said Shamrock's withdrawal "feels awful," and will try to stay hopeful that they can attract new interest. But not everyone was disappointed with this latest turn of events. Some residents, especially those in the immediate vicinity, necessitated 80 public scoping meetings and even filed an unsuccessful lawsuit in the last few months. Their concerns? You guessed it - traffic and parking.

Italian Rail Manufacturer to Commence "Greening" of Downtown

AnsaldoBreda, the Italian lightrail manufacturer that has held a contract with MTA in the past, has been entrusted to build a "green" industrial plant near the LA River, in anticipation of extended contracts with Metro. The Community Redevelopment Agency is expediting its decision to allow the company to build on the exclusive site in exchange for a renewed $300 million contract with Metro. MTA criticized the Italian firm for its handling of the delivery of the 50 cars shown in the video above, but the firm has promised 650 full-time area jobs to accompany the plant and corporate headquarters. At 12% unemployment, the city is hardly in a position to turn them down.

Under the agreement, AnsaldoBreda will lease 16 of the 20 acres for 50 years, allowing the city to seek other tenants. Mayor Antonio Villaraigosa and the CRA hope a "clean plant" on the corner of 15th St and Santa Fe Ave will anchor a string of new green technology centers in the city's emptying industrial core. The city, which purchased the prized property from the state in 2008, is demanding a $15 million deposit from the company, with annual rents approaching $1 million. AnsaldoBreda, which has produced lightrail cars for cities across the US and Europe, is anxious to be granted the new 100 car contract, which will provide the MTA with its necessary arsenal for the new Expo and Gold lightrail lines.

These negotiations are a prime example of how complex local private-public partnerships can be. The mayor's office, the CRA, the MTA, and AnsaldoBreda all have distinct goals and interests for the outcome of the agreements. In theory, everyone can win - AnsaldoBreda saves money by manufacturing locally, the mayor gets bragging rights on job creation and green technology, the CRA gets development in a blighted neighborhood, and the MTA gets its cars. But the red tape and the pricetag bargains mean it's not so easy. The LA Times published a smart article that outlines the city's plans for a grand redevelopment of the industrial wasteland straddling the river downtown. Let's hope this works, because if it doesn't, Villaraigosa will be remembered as the mayor that promised everything and delivered absolutely nothing.

LA Coliseum—Decaying and Underutilized—Remains in Strict Public Control

State senator Jeff Denham (R-Atwater) published an Op-Ed in the LA Times Monday, calling for the sale of the coliseum by its public owners and the dissolution of the controversial Coliseum Commission. The LA Memorial Coliseum, built in 1932 for the Summer Olympiad, was registered as a historic landmark in 1984, the year of the Olympics' return to Los Angeles. But since a major retrofit that year, the stadium has been rapidly decaying and is used less and less frequently. The coliseum is owned by a confusing partnership between the city, the county, and the state - all of which have plunged into debt since the recession. The USC Trojans football team is the only large, long-term tenant at the stadium, and is desperate for a policy change.


Trojan fans will remember the anxiety-inducing negotiations last year that almost forced USC to temporarily play at rival UCLA's Pasadena Rose Bowl. When USC offered to buy into the coliseum's ownership, the commission not only refused, but threatened to evict the university as
a tenant. USC, frustrated with the government's inaction at the stadium's obvious disrepair, offered $100 million to help renovate (and partially own) the coliseum. Denham argues that the Trojans are the biggest stakeholders in the stadium and its future and should therefore have the right to own part or all of it.


Denham also reflects the growing confusion on the part of both lawmakers and the sports industry, as to why the debt-laden tripartite government "monster" would refuse a private investment for public gain. The Coliseum had hopes for outside intervention back in 2006 when Los Angeles bid to host the 2016 Olympic games - a US designation that was quickly and cruelly lost to Chicago. And for years politicians and developers alike have been struggling to attract a major league football team to return to the coliseum. But since the news of the cheaper and flashier stadium in City of Industry, that struggle has been rendered moot. Bottom line: the coliseum is a beautiful and much beloved historic landmark, but it is structurally unsafe and aesthetically dejected, and the public sector (all three of 'em) cannot afford to hold onto it, especially in these times.