But the decision to buy a home in a region in the throes of a housing crisis is much more than a financial one. And it’s not one that can be answered with a simple “yes” or “no” (sorry!).
Below, local experts, including nonprofit leaders and real estate agents, talk not just about money but also about the other questions buyers should consider when weighing the pros and cons of house-hunting in Los Angeles: How long do I plan to live there? Will I send my children to the local public schools? Will I be buying into a system that perpetuates wealth at the expense of those who have less of it?
Their responses can a bit heady—but stick with them. If you love Los Angeles enough to plunk down a life’s worth of savings in order to stake down roots here, take the ethical considerations as seriously as the interest rates.
We collected the responses below before the outbreak of novel coronavirus in the U.S. How might its spread impact the housing market this year? Read this.
Real estate agent, Compass
There are two reasons it’s a good year to buy in Los Angeles: lower interest rates and high standards for showing and selling homes. It used to be that when you went to an open house, you’d cross your fingers and just hope that they closed their drawers and put their underwear away. Today, homes look like they walked out of the pages of Architectural Digest. You’re going to pay a crazy-high price, like $1.4 million, for a three-bedroom, two-bathroom house in a place like Eagle Rock, but you’re actually getting more for your money. Houses are more fixed up with designer-type finishes. They’re way, way better.
Because the prices are so high, everybody thinks the market is going to go down, and the reason is that they want it to go down—because then they can buy. And maybe it will come down, but no one can predict exactly when. And if you find a house that you like this year, and you let it go, it’s more likely that the house is just going to be more expensive next year.
If you look at the long-term, it’s always a good investment to buy in Los Angeles. If you wait long enough, and if you’re well financed to weather a storm, you will always get your money back or make profit.
“When you have 36,300 people experiencing homelessness, it changes the whole question. It becomes: What makes a good city, and how do you ensure that people at all incomes are able to survive—beyond living in a tent?”
Director of LA Commons
I bought a house in 2000. Would I buy a house today? I would if I could. But I don’t think I’d be able to afford it. My whole life my dream was to buy a house. It is drummed into us that renting is bad, buying is good. But the calculus has changed exponentially. And when you have 36,300 people experiencing homelessness, it changes the whole question. It becomes: What makes a good city, and how do you ensure that people at all incomes are able to survive—beyond living in a tent? That wasn’t so much of a question in 2000.
But it’s good to have a house, because you have control over your living situation. In a rental, especially in this steep market, you can end up being on the short end of the stick, where you’re forced to move.
And what makes my quality of life great on my street is not just the fact that I have a house. I have relationships with my neighbors, sometimes we have get-togethers, and I know I can call on some of them when I need something. What you’re buying into hopefully is a community. If you’re buying a house, ask yourself how prepared you are to be a contributing member of the community.
Associate professor of real estate, USC
In Los Angeles, this is always a great question. But was there agreement in 2005? 2009? Can you name a time when it was clear to buy—or not? In 20 years of being in LA, I can’t remember a time when there was consensus on this. People remember the rapid run-ups in prices and the fear of missing out; some are hyper aware of having lost their equity when prices fell sharply just a decade ago.
My answer to this question always asks a follow-up question: How long do you plan on staying, and do you like your neighborhood and house? Ownership means you get to grow roots, protected from the vagaries of rents and landlords. You certainly bear some risk. There will be ups and downs along the way, but fundamentally the economy is vibrant and quality of life is high here. But I think house prices are going to be higher in the future. I have no confidence that the region is committed to allowing enough housing to be built, certainly not enough to meet the demand for all of those who would like to come to LA.
“If you’re going to buy in a neighborhood … be part of the community and the public life—and that includes the public school district—but also shopping in your community, walking in your community, taking care of your yard, sitting on your front porch … If you’re not willing to be part of the neighborhood, then you really don’t belong there.”
Professor of architecture, urban design, and urban planning at UCLA
The question should be: “Should you buy in a neighborhood where you’re going to displace someone?” And then: “How can I determine ethically where to buy?”
When you’re looking for the cheapest house on the market, and you see a lot of renters in the neighborhood, and the houses are selling higher than the listing price, and they’re selling quickly—or if the realtor tells you “this is an up-and-coming neighborhood”—those are bad signs. In a city with few tenant protections, it’s important to pay attention to the number of renters. If I’m a renter and my neighbor sells a house for $500,000 that she bought for $50,000, my rental will become more valuable. My landlord could say, “Well, you’re paying $1,000, but based on that sale next door, I know I could be getting $2,500.” Each act of sale or speculation has the consequence of indirect displacement on renters.
In these neighborhoods, the first test should be: Are you welcome there? The second is: Will you send your child to the local public school? If you’re going to buy in a neighborhood, you have to take responsibility for making the schools better, just like your neighbors are doing. Be part of the community and the public life—and that includes the public school district, but also shopping in your community, walking in your community, taking care of your yard, sitting on your front porch. Those are tests most people buying in gentrifying communities would not pass. If you’re not willing to be part of the neighborhood, then you really don’t belong there.
Co-executive director, LA Mas
Is homeownership the thing you should still aspire for, given its nature of exclusivity? In some ways, it really enforces the division between people who have access to capital—and can continue to build on that through homeownership—and those who do not. The system is really complicated, and the options are limited.
I work at a nonprofit, I have a humongous amount of graduate student loan debt, I help support my parents (they have no savings to pass on to me), and I can’t afford to buy a home in LA. At the same time, my partner and I live in a rent-stabilized unit. I could probably afford to pay more, but I benefit from the policy. I think about all of the renters who are making hourly wages and can barely afford the cost of living in LA, and I’m deeply conflicted. I wish our policy was taking into consideration the people who need rent control the most.
I also see that a lot of people do buy homes, and then they’re tied to a way of life of constantly having to work, and you’re working to reinforce this structure, and it’s because there aren’t alternatives to feeling housing secure—and that’s a problem.
I wish that single-family homes weren’t the only option out there. I encourage people to think about what they can do if they combine their resources with their friends and family. Other than buying on your own, think about how you can share in that equity. Backyard homes are one way to do that.
Interview responses have been lightly edited for length and clarity.