It’s not yet spring but it feels like the market is off to the races.

 

Houses that were sitting in the fall/winter suddenly have offers (and good ones too!) and 15-20+ offer bidding wars are back (and not area or price point specific either - Los Feliz, Mount Washington, Hancock Park, El Sereno…).

 

Is this the end of the low-rate “locked-in effect,” where homeowners stay put because they are married to their low rate/low purchase price?

 

I'm not declaring it just yet, but people do eventually move. Life doesn't wait for 3% mortgages to return. Divorces, job changes, growing families, and downsizing come for us all.

 

And frankly, as the saying goes, the hous(ing shortage) always wins.

 

 

As our buyers who are eagerly waiting for any house to hit the market will tell you: the housing shortage in LA is alive and well.

 

If you read up on the reasons why, it’s hard not to be stupefied by how short-sighted our city planners were half a century ago.

 

LA underwent a “great downzoning” in the seventies and eighties, when the city's projected population was lowered from 10 million to 4 million. 

 

This was a time when growth was a bad word – there was alarmism about the population and the world getting covered in garbage (this was before recycling), and something had to be done. Some kids from the era grew up and made Wall-E about exactly this.

 

This anti-growth policy by anti-growth residents (now colloquially referred to “NIMBY”s - “Not In My BackYard”) included decreasing density, increasing parking requirements, and setting larger minimum lot sizes. 

 

And get this. The reason LA has no residential high-rises outside downtown? In 1986, Proposition U, backed by a group called "Not Yet New York" (seriously), passed by a 2-to-1 margin. It cut the allowable building size on 70% of LA's commercial and industrial land in half.

 

The headlines were hilarious: “Preserve the L.A. Dream Before It Disappears Amid High-Rises and Traffic."

 

The result? Skyrocketing rents and the ever-growing housing shortage. So here we are 40 years later, and the rents & home prices are too damn high. 

 

Politicians are trying to play catchup: it was only last year that state lawmakers made a carveout to Proposition U, finally allowing high density apartments near subway stations with SB 79.

 

But don't forget the NIMBYs - it can take years if not decades with the public hearings, litigation, and objections from neighbors (remember the bird watching community's outrage to the Silver Lake reservoir expansion plans? 🙄).

 

And frankly, there's not much to do about it. The lots are the lots, zoning is hard to undo, and construction costs are the highest they've ever been.

 

 

Now the brilliant lawmakers proposed and the city of LA passed Measure ULA— a 4% tax on sales over $5.3 million and 5.5% on sales over $10.6 million, including on not only so-called “mansions” but new construction and apartment buildings.

 

The result? A 50% decline in sales over the ULA threshold, meaning less economic activity, less property taxes, and the total gutting of apartment construction.

 

Builders of apartments almost always sell them – and now they can’t without losing money. So they don't build them.

 

Our council member Nithya Ramen understood the reverse effect of this and proposed to amend the bill to exempt new construction, but it just got shelved.

 

Here's the thing, City Council: you tax what you don't want. Like cigarettes. If you tax new housing and home sales, you get less of them. 

 

       -Brock

🏡 📉 “Finally,  A Renter's Market”: LA Rent Prices Drop to Four-Year Low. 

💰 🏰One of LA's Top Ten Homes is Finally on the Market: Ray Kappe's Modernist Masterpiece Asks $11.5 Million in Pacific Palisades. 

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