This Is What It's Like to Buy Houses... Or Not Buy Them
By Joe Dungan
May 18, 2007
Picture it: A young married couple is looking to get out of their North Hollywood apartment and buy their first house. They find a nice middle-class house in a decent neighborhood in Van Nuys with two bedrooms, a den, one-and-a-half bathrooms, and a detached garage.
They offer $12,000 for it. And their bid is accepted.
This is what happened to my parents in Van Nuys in 1967, before they divorced, before that part of Van Nuys became a bit dodgy, and before real estate increased about 4,800% in value. If you still think nostalgia is for assholes, then you have no soul.
I bring this up only because the cost of housing is something we used to bring up all the damn time here. But it comes up in conversation less and less these days, probably because it is as much of a reality of life here as the traffic. And the reality is a beautiful one for people who own a place and a hideous one for those who don’t.
At this point, you may be wondering what I’m saying that isn’t true about the rest of the country. First of all, it’s not true about the rest of the country. In some cities, housing prices are as stagnant as fashion trends of a cattle rancher. (Ever hear anyone telling you to get in on a great real estate deal in Detroit?)
Second of all, prices are more exaggerated here than in other “hot” markets. Sixteen of the one hundred most expensive zip codes are in our county. The median home price is $545,000, putting Los Angeles fourth in the nation. One study cited Los Angeles as the least affordable housing market in the nation, stating that a grand total of two percent of the homes are affordable for residents making median incomes.
There is one figure that astonishes me most. Consider that, depending on the personal finance expert you talk to, one should spend 25 to 33 percent of one’s income on one’s mortgage. In Los Angeles, the average is 62 percent, putting it far ahead of that of any other city.
In the twisted world of real estate, the demand that shot prices up also forced many of us out of the buying market. So, in addition to a huge number of people racing to buy homes, another huge number of people took shelter in the rental market, driving up rents as well. Today, the twelve grand that my parents spent for ownership of an entire house in (what was then) a very decent neighborhood gets you a year’s rent in a small apartment in a marginal neighborhood.
So not only are pre-2000 buyers basking in the good fortune of buying something that doubled in value in five years, but even renters of the era are considered lucky. I was fortunate enough to get into a nice apartment in 2001 that was run by a guy who didn’t realize just how much he could be asking for his vacant units. As the years go on, people register more and more astonishment when I tell them just how little I’m paying for my place, and how rent-control laws will forever dampen my annual rent increases. Despite the purported illogic of renting, I’m very reluctant to give up my inexpensive flat unless I’m absolutely certain I won’t be returning. Nice apartments this cheap are nearly as extinct as $12,000 houses in Van Nuys.
I’d gone my whole adult life not looking at open houses because I never felt I could afford one. Seemed like a waste of time, like test-driving a car I had no intention of buying. But one Sunday last year, when I went for a jog at a nearby high school track, I gave it a shot. A Realtor was setting up little flags outside a modest house across the street just as I arrived. More than an hour later when I headed back to my car, I saw her standing by the living room window, gazing out longingly for anyone to come in and look at the place. I had a job back then, so in the back of my mind, I felt I wasn’t completely wasting her time, since, theoretically, I might have qualified in some way for a loan to buy the place. Plus, the Realtor was pretty.
She was a very nice woman who led me on a walk-through of what I would call a small tragedy. The previous occupants were renters who’d been there for about 30 years and had done nothing to the place but wear down the carpet. The décor was straight out of a 1970s catalog. The add-on den was a dank hole that looked best suited for people to crash on the floor and get high. The backyard was the size of a beach towel. And it was all across the street from a high school. Despite all these advantages, the owners were eager to unload it, so they were asking about $30,000 less than comparable houses in the area. They were asking $569,000. It took about two months, but it sold.
I haven’t walked through an open house since.
I’ve concluded that there are three types of homebuyers (or non-homebuyers) here. People who got in before the boom are the ones literally sleeping in their cozy retirements. No one talks about them, and they don’t have much to talk about except how sorry they feel for young people today.
People who got in more recently are alternately thanking their lucky stars that they did and wondering how the hell they’re going to make the mortgage next month. They do both in private because the former is immodest and the latter is too personal a matter to discuss publicly -- for the most part. On occasion, I hear such people freely admit that they couldn’t possibly have afforded their house without their parents’ help. One woman I know even shared that she and her husband had no business buying a house during the boom. They were both unemployed (he is actually a freelancer) and had lousy credit. But at least it got them out of the townhouse they were renting for over two grand a month.
Speaking of rent, that brings us to the rest of us: renters -- in which there are subcategories. Some renters are so resigned to renting for the foreseeable future that we don’t bother to foresee any other future, so we don’t talk about when or how we’re going to buy anything more extravagant than concert tickets.
Some renters are getting closer every day to moving to other states (some of whose cities are already so filled with ex-Angelenos that it’s either a joke or a nuisance). Generally speaking, for whatever reason, such people have a tendency to ponder such a move in private. Next thing you know, you’re getting an email from them, telling you of their new address -- in another state, where they bought a house for a price so low that you think they’re lying about it.
But then there is another subcategory of renter: those of us who are waiting for the bubble to stop this slight leak bullshit and burst already. We’re convinced it’s possible, because it doesn’t make sense, we keep telling ourselves, that prices not only got this high, but have stayed this high. We go around complaining that this is unfair, that we don’t feel sorry for all the fools who are foreclosing on homes they could never afford in the first place because people like them drove up the cost of houses. We also excoriate flippers who only added to the demand, and are glad to see them bailing out on their investments.
And still, housing prices remain high, mainly because we’re all locked in a staring contest, waiting for each other to leave so demand will drop. So we have all resorted to waiting for something that can cause a mass exodus, something that would induce a reduction in demand sharp enough to force a precipitous drop in home prices.
We’re not asking for anything bad. We simply wish a violent act of God would scare the shit out of a few hundred thousand of our neighbors and compel them to flee permanently. Never mind the death toll, which could reach into the thousands, or the property damage, which would likely be in the billions. We want a goddamn house and we don’t care who has to die so we can afford it. And there is no discretion factor on this topic. If there’s one thing that Los Angeles homebuyers agree on publicly, it’s wishing a humongous natural disaster on ourselves.
Otherwise, we’d just have to rent for the rest of our lives. And that would be crazy.
Copyright © 1998-2006 TheSimon.com
View this story online and more at: http://www.thesimon.com/magazine/articles/la_nuts/01387_this_what_buy_houses_buy_them.html