Almost every weekend of the year I do an open house. Inevitably, during one of these three hour windows of time, someone will come in and we'll begin discussing the current real estate market. Sometimes this person will be incredibly discouraged by the great expense it takes to own a home on the Westside. And often enough they will make a comment like "well, it's great for you real estate agents, you're making more money!" Then I stop and tell them that it's not great for me. I don't like seeing more and more people priced out of the market. It's disappointing when a young family of three, both parents working professionals, can't afford a two bedroom house or condo in a decent neighborhood. There are many great things about owning your own place, and once you have children it is even more important.
Some California economists are expecting a second wave of an increase in property values along the California coast. This will supposedly happen as the baby boomer generation begins to retire over the next five to ten years. This would further reduce the affordability of housing. I really have a lot of love for the baby boomers-- they brought us civil rights and Bob Dylan. However, vibrant economies don't happen in geographic locations dominated by retirees where young families can't afford to be. I live and sell real estate in Los Angeles because it's vibrant, active and exciting.
The current housing affordability index was released this week by the California Association of Realtors. The current affordability index statewide is at just 25%. This means just one in four households of first-time buyers can afford to own by their own means. Many people in this situation end up receiving outside help from parents or relatives, making this figure probably closer to 35% of first time buyers are able to afford a home. The figure for Los Angeles County is at 19% of households can afford a home at the median price of $500,000. Considering the median price for a house in Santa Monica is $1,500,000 and a condo is $805,000, affordability in our fine little liberal community is closer to 10%.
What can we do? One thing we could do is encourage city hall to relax condo conversion laws and make it easier to build in Santa Monica. The main law of commerce is supply and demand. If we had more supply in relation to demand, properties would be more affordable. If you look around Santa Monica, when a building is taken down, say a ten unit apartment building, the developers end up building four to five townhouses. The city doesn't allow condo conversions to protect tenants. So, instead of allowing tenants the opportunity to afford the joy of home ownership, the system encourages developers to tear-down the old buildings. They move everyone out and rebuild a less efficient property that caters to a significantly smaller number of households. The city doesn't allow you to build an eight to ten unit building of single level residences. This sort of design is more efficient. The city should also allow new three to five story properties instead of just two-story ones. Let's have building restrictions that encourage more for sale housing to be built, not less.
I agree that development needs to have restrictions and the beautiful aesthetic of our neighborhoods needs to be preserved. However, let's not continue to confuse the true intent of socially liberal values. Let's make it easier for people to afford to live here, not harder. What do I know, I'm just a real estate agent?
Simon Salloom is a local REALTOR with Coldwell Banker Residential Brokerage. To comment on this article and learn more about Santa Monica Real Estate click here.
