Last year, rising mortgage interest rates chilled the previously hot Southern California housing market.
Buyers backed off, sales plunged and, for the first time in a decade, home prices underwent a sustained slide.
By one measure, prices in the six-county region fell 13% from the peak last spring.
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That might be as low as they go.
In recent months, there have been growing signs home values may have resumed their climb, potentially dashing the hopes of first-time buyers holding out for cheaper housing in the months or years ahead.
What exactly is happening?
According to several data trackers, home prices ticked up in the last few months.
In April, the median sales price for an existing single-family house in Southern California rose 2% from a month earlier to $785,000, according to the California Assn. of Realtors. That was the third straight month prices climbed from the prior month.
Similar increases can be found in data trackers from mortgage company Black Knight and real estate brokerage Redfin.
Butnot all sources show prices rising across the board.
According to Zillow, the typical price in the combined six-county Southern California region continued to fall in April, but the decline was the smallest since values turned negative last year.
Why is this happening?
Essentially, buyers have been more willing than sellers to return to the market this spring.
A decline in mortgage rates from above 7% into the 6% range brought some buyers back, real estate agents say, as did a belief among buyers that rates wouldn’t fall much more if they continued to hold out.
Some agents said they’ve seen mostly first-time buyers return.
“Why pay high rent?” Ramon Sanchez, a Whittier-based agent, said. “They would rather see if they can qualify to buy.”
Jeff Tucker, an economist with Zillow, said first-time buyers may also be “bursting at the seams in their apartment” as their families grow, another reason “a lot of interested first-time buyers are not in a place where it’s easy to wait.”
At the same time, many homeowners are waiting, unwilling to list their homes and trade their sub-3% mortgages to borrow at 6%.
Since the start of the year, the total number of homes for sale in Southern California has dropped 21%, according to data from Redfin.
Despite fewer options, sales increased 34%.
“Inventory is just very low,” Tucker said. “There are enough folks who can afford prices at this height that they are still bumping into each other getting into a little competition.”
If I am looking to buy a home now, what should I know?
Well, there is a little more competition. Compared with a few months ago, open houses should be busier and there’s a greater chance you’ll need to bid against others.
Tracy Do, a Coldwell Banker agent who specializes in the highly sought-after neighborhoods of northeast L.A., said that once again, some homes are selling for more than $100,000 over asking.
In southeastern Los Angeles County, Sanchez isn’t seeing jumps as big, but the last three properties he listed had multiple offers and either sold, or are in escrow, for more than the list price.
“We got more buyers in the market than we have sellers,” Sanchez said.
Although the market is more competitive, it’s nothing like the pandemic housing boom.
In March 2022, buyers paid more than list price in 76% of home sales in Los Angeles and Orange counties, according to Zillow. Fast-forward to March 2023, that percentage was 42%.
Do said buyers — compared with early 2022 — are also more likely to get away with leaving in contingencies, or convincing the seller to pay for repairs.
Pricing is also lower.
According to the California Realtors, though April’s median in the combined six-county Southern California region was up $15,000 from March, it was $52,000, or 6.2%, below April 2022 levels.
In Los Angeles County, the median was 8% less than a year earlier and 17% lower than when prices topped out in the county last September.
In Orange County, April prices were 8% from that county’s peak; in the Inland Empire, 5% below the peak; in Ventura County, 7% below the peak; and in San Diego County 5% below the peak.
Will home prices drop further?
What ultimately happens will be influenced by a variety of factors including the direction of mortgage interest rates and whether the economy enters a recession.
But Tucker, the Zillow economist, said the most likely scenario is home prices rise from here on out, because high mortgage rates should keep many homeowners from listing their homes.
Jordan Levine, chief economist with the California Assn. of Realtors, also predicts rising prices, but like Tucker at a more modest level than during the pandemic.
Levine said still-high mortgage rates and a slowing economy are likely to damp demand enough to keep prices from soaring.
Other experts stressed that values could again turn negative.
“Home prices are still well out in front of what underlying incomes today would support at today’s interest rate levels,” said Andy Walden, vice president of research at Black Knight. “There is still potential price risk out there.”
You may have seen the videos on TikTok promising something that sounds too good to be true: Free cash from the state of California to help you buy your first home. The good news is, that program actually exists! The bad news is, it’s already out of money.
The California Housing Finance Agency launched the California Dream for All Shared Appreciation loan program two weeks ago, offering qualified first-time buyers up to 20% of the purchase price of a house or condominium. The help was available only to households whose earnings were below CalHFA’s income limit, which is $180,000 in Los Angeles County and $235,000 in Orange County.
State lawmakers had set aside $500 million for the program as part of the 2022-23 budget. But a looming fiscal shortfall led Gov. Gavin Newsom to propose a 40% cut, so when CalHFA launched the program late last month, it was allocated only $300 million and expected to assist about 2,300 home buyers.
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On Friday, the CalHFA website announced that all the funds “have been reserved.” If you’re not already in the pipeline for a loan, you’re out of luck — at least for now.
More funds will be available to the program at some point, said Kathy Phillips, CalHFA’s director of communications. “However, we cannot predict whether that will be in the coming months with an additional allocation [from the state budget], or in the coming years as repayments of these original loans come back to be recycled to help additional households,” Phillips said.
She emphasized, “The program was designed to recycle [money for loans]; however, that will not begin until these loans are repaid.”
To be alerted when the program starts up again, sign up for CalHFA updates on the agency’s website.
How it works
The program was unusual in terms of both its structure and the type of loan issued.
The loan, which can be used for a down payment and closing costs, is structured as a second mortgage, which means it isn’t repaid month by month. Nor does it accrue interest the way an ordinary loan does. Instead, when the mortgage is refinanced or the house is sold again, the borrower pays back the original amount of the loan plus 20% of the increase in the home’s value.
If the home is ultimately sold for the same amount it was purchased for or less, the buyer won’t need to pay the additional 20%.
With this type of loan, the effective interest rate is equal to the average annual increase in the home’s value. That’s been about 5% in California over the long term, but the increase varies widely on a year-to-year basis, according to the CalHFA.
“For example, in 2008, real estate values plunged by 35%,” the agency stated. “Conversely, real estate values spiked nearly 40% between 2020 and 2021.”
There is a cap on the amount of the appreciation owed. No matter how much the home increases in value, the borrower will need to pay at most 2.5 times the original loan amount.
To receive a loan, borrowers must complete a home buyer education and counseling course (there are options for online and in-person classes on the CalHFA site) and a free online course specifically for shared appreciation loans.
The other unusual feature is that the program is designed to replenish itself. The loans are “revolving,” which means that when a borrower repays the loan, the money can be loaned again to a new borrower.
CalHFA doesn’t make the loans directly; instead, they are made through private lenders authorized by the state.
Jon Healey, senior editor for the Utility Journalism Team, contributed to this report.
About The Times Utility Journalism Team
This article is from The Times’ Utility Journalism Team. Our mission is to be essential to the lives of Southern Californians by publishing information that solves problems, answers questions and helps with decision making. We serve audiences in and around Los Angeles — including current Times subscribers and diverse communities that haven’t historically had their needs met by our coverage.
How can we be useful to you and your community? Email utility (at) latimes.com or one of our journalists: Matt Ballinger, Jon Healey, Ada Tseng, Jessica Roy and Karen Garcia.
Six months ago, Los Angeles County leaders signed off on an unprecedented transaction: They would return two parcels of beachfront property in Manhattan Beach to the Bruce family, the first example of the government giving back land to a Black family after acknowledging it had been stolen.
On Tuesday, the county announced a surprise twist in the historic deal: The family would sell the Bruce’s Beach property back to the county for nearly $20 million.
In the early 1900s, Willa and Charles Bruce were pushed out of a bustling resort they had built, beloved by the area’s Black community. The Ku Klux Klan, along with other white residents of the area, plotted to drive the family away and city officials later condemned their property in 1924 through eminent domain, claiming they needed the lots for a park. The family’s resort was demolished, and the Bruce family moved away. The park would not be built for decades.
In an effort to “right the wrongs of the past,” the board made the momentous decision in June to return the Manhattan Beach land to the descendants of the Bruces, a move celebrated nationally by reparation advocates.
As part of the agreement, Bruce family members had a two-year window in which they could require the county to buy back the property from them. They have decided to do just that.
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Attorney George Fatheree, who represents the family, said in an interview the sale was not unexpected and the family had always wanted to have the option to sell the property back to the county. He emphasized the sale was still a victory for the Bruce descendants, who would no longer have the land their grandparents were robbed of but instead the money they should have inherited.
For the record:
11:39 a.m. Jan. 8, 2023An earlier version of this story incorrectly quoted a remark from attorney George Fatheree. He said, “What the property represented was the ability to create and preserve and grow and pass down generational wealth,” not “the ability to create and preserve and group.”
“What was stolen from the family was the property, but what the property represented was the ability to create and preserve and grow and pass down generational wealth. And by allowing the family now to have certainty in selling this property to the county, taking the proceeds of that sale, and investing it in their own futures — that’s restoring some of what the family lost,” Fatheree said. “I think we all need to respect the family’s decision to know what’s in its best interest.”
Fatheree said multiple factors contributed to the family’s decision. For one, he said, none of the descendants live in Southern California, and they were in stages of their life where they wanted money to invest.
He also said the land was not zoned for development, and the family members were wary of the years-long permitting fight they would need to wage if they wanted to start building.
“At the end of the day, what the family was very focused on was certainty and being able to access the proceeds of the sale,” he said.
County Board of Supervisors Chair Janice Hahn, who helped initiate the transfer, similarly characterized the sale not as an abrupt change, but as an example of reparations at work.
“They feel what is best for them is selling this property back to the county for nearly $20 million and finally rebuilding the generational wealth they were denied for nearly a century,” Hahn said in a statement. “This is what reparations look like and it is a model that I hope governments across the country will follow.”
The transfer of the property last year was hailed by some as a potential turning point in a nation with a long history of confiscating land from racial minorities, blocking them from the generational wealth that white residents enjoyed. Gov. Gavin Newsom, who signed Senate Bill 796 into law allowing the county to make the transfer, called the deal “catalytic.”
State Sen. Steven Bradford (D-Gardena), who authored SB 796, said he supported the Bruces’ decision, framing the sale as the logical move given zoning requirements he said barred the family from fully developing the property. Currently, he said, it’s zoned only for public use.
“It’s bittersweet. I’m excited about the fact that the family can reap some monetary benefit from property that should have been in their family for 100 years had it not been stolen, but it’s disappointing that the family came to the conclusion of having to sell the property because they saw no long-term financial benefit,” he said. “I think they just saw the writing on the wall and said, ‘Hey, we might as well sell it right now while the market’s good.’”
Though surprising to some who cheered the Bruce’s Beach transfer as a rare reparations success story, a sale back to the county has always been an option. The transfer agreement the two parties hashed out last summer contained a two-year window in which the family could require the county to buy the land back for the value of the property — roughly $20 million. The county said in a statement the buyout option was put in the agreement at the family’s request.
A county team that worked alongside an attorney for the Bruce family conducted an economic analysis to determine the property’s value.
The county maintains a lifeguard training facility on the property. Since the property was transferred last summer, the county had been leasing it from the Bruces for $413,000 a year.
The parties have until the end of January to close the sale, according to Fatheree.
The steep hillsides of Benedict Canyon offer unobstructed views, glimpses of soaring hawks and a quiet that one rarely encounters in the city.
But whether this leafy enclave should also house a luxury resort for the wealthy is sparking a fierce debate.
The Los Angeles City Council is expected to vote Tuesday on whether to try and halt a developer’s plans for the 58-room Bulgari Resort Los Angeles.
Developer Gary Safady is in the process of seeking city approvals for the hotel after it cleared an initial hurdle at the Planning Department several years ago.
City Councilmember Katy Yaroslavsky, who represents the wealthy neighborhood, is seeking to block the project.
The council Tuesday is expected to take up her motion asking city Planning Director Vince Bertoni to consider rescinding the initiation of a general plan amendment for the project. The amendment is needed because the general plan doesn’t allow hotels in the neighborhood.
Yaroslavsky said the city’s planning staff shouldn’t be wasting time on the project, which she deems inappropriate for the Santa Monica Mountains. She vowed to oppose the hotel during her campaign for City Council last year.
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“For me, preserving the Santa Monica Mountains is a core value,” said Yaroslavsky, who formerly worked as a land use lawyer for the Santa Monica Mountains Conservancy.
Safady told The Times that Yaroslavsky’s effort to halt the development is “a shame.”
“I think it’s based on a campaign pledge without having any knowledge of the property or merits of it,” he said. “There’s codified procedures that are built into the city to protect against stuff like this, so her actions are completely contrary to that.”
Safady said city staff have spent “thousands of hours” reviewing the resort application, and a draft environmental impact report will be published soon.
The 33-acre site off Hutton Drive in Benedict Canyon was once owned by businessman Kirk Kerkorian. Some of the property already has been graded. Safady said he stays in a small home on the property when he is in Los Angeles.
Former District 5 Councilmember Paul Koretz initially supported initiating the general plan amendment for the project, according to Nora Frost, a spokesperson for the Planning Department. The initiation application was approved by Bertoni in 2017, Frost said.
Koretz didn’t return a phone call. He told the L.A. Times editorial board that initially he was “somewhere between encouragement and being OK with it” and wanted to see if the neighborhood liked the project. Later, he came out against it.
Maria Salinas, chief executive of the Los Angeles Area Chamber of Commerce, said Monday that her group “supports the city’s review process for development” and that real estate projects such as Bulgari “rely on these processes to ensure a fair review.”
Several large labor groups, including Unite Here Local 11, support the project.
Mayor Karen Bass opposed it last year on the campaign trail; her spokesperson Zach Seidl wasn’t able to provide an answer about her position on Monday.
There are two competing community groups: Save Our Canyon, which opposes the project, and Enhance Our Canyon, which supports it.
Celebrities have taken sides: Singer Lance Bass supports it; others, including actress Jacqueline Bisset, have warned about increased fire risks.
The hotel would consist of a dozen bungalows, along with a stand-alone building, that house 58 rooms. Also planned are a sushi restaurant, spa, screening room and parking structure. Eight private residences on the property could range from 12,000 to 48,000 square feet each, Safady said.
He estimated that 50 to 70 employees would work at the hotel. To contend with the flow of cars coming up the canyon roads, a carpool program for employees would be instituted, he said.
Safady suggested that the hotel would be less prominent and have less of an impact than if large mansions were constructed on the land. A developer could carve up the 33-acre parcel and build 30 homes, he said.
Asked about that statement, Yaroslavsky said, “If Mr. Safady would like to pull his proposal and submit a new plan for housing based on what this property is currently zoned for, by all means he should.
“The number of homes that would even be allowed on this site would have a far less intensive use than a commercial hotel, which hasn’t been allowed in the Santa Monica Mountains in 80 years,” she noted.
It’s far from clear whether Yaroslavsky has support from her colleagues in trying to halt the project.
Councilmember Hugo Soto-Martínez, a former organizer with Unite Here Local 11, is “still considering his position on this issue,” his spokesperson Nick Barnes-Batista said Monday.
Two council members declined to support Yaroslavsky’s motion at a March meeting of the Planning and Land Use Management Committee.
“Don’t we have to allow due process to happen?” asked Councilmember John Lee, who represents the northwest San Fernando Valley. Councilmember Monica Rodriguez, who also represents the Valley, voiced similar concerns.
Councilmember Marqueece Harris-Dawson, who represents South L.A., sided with Yaroslavsky.
At that meeting, Yaroslavsky said she had been told by staff at the city attorney’s office that it was “in the discretion of the [Planning Department] to rescind the process that they have started.” She also cited several wildfires in the region since the application process was started for the hotel.
The city is “going to get sued no matter what” by the developer, she added.
Yaroslavsky, in an interview last week, said there is precedent to roll back a general plan amendment initiation, pointing to the council’s 2016 decision that ultimately stopped a developer from pursing a plan to put hundreds of apartments along the Cahuenga Pass.
In that case, developer Behzad Forat later sued the city but lost. In an interview Sunday, Forat said he’s appealing the court’s decision. He expressed frustration with the council.
“[City officials] cry for the fact that there’s a shortage of housing, but then they stop people from building,” Forat said.
In a twist, land use attorney Fred Gaines represented Forat on the Cahuenga Pass project in his dealings with the city. Gaines is now working with Save Our Canyon, which opposes the Bulgari Resort.
Earlier this month, Gaines sent a letter to the council that suggested the project had been improperly rushed through the initiation process.
The Planning Department’s Frost said the application was “treated like all requests that have been received by the department.”
Heading into the peak of summer, Los Angeles officials want to know what it would take to require every rental unit in the city to have an air conditioner or central air.
Just last year, Southern California was gripped by a 10-day heat wave that smashed temperature records. By the time it subsided, Los Angeles County emergency crews had responded to 146 calls classified as “heat” — defined by the agency as environmental hyperthermia.
Now, city staff are studying the costs and feasibility of cooling off all rental units citywide.
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“At this point in the climate emergency, the ability to cool one’s home cannot be considered a luxury and rather must be treated as a necessity,” Los Angeles City Councilmember Eunisses Hernandez said in her motion proposing the feasibility study, which would include a cost estimate for updating the city’s building code.
“Requiring cooling apparati for all residential units could be a lifesaving measure for countless Angelenos during extreme heat events.”
The council approved the motion Wednesday, and it is expected to come back for public input.
A 2021 Times investigation found that 3,900 deaths were caused by extreme heat in California from 2010 to 2019. But access to lifesaving cooling devices and the ability to cover the costs of electricity during a heat wave are often out of reach for low-income and elderly residents on a fixed income.
As part of the proposed study, the council asked staff to determine which buildings lack submeters, devices that allow utility companies to track power consumption on a unit-by-unit basis, and also the difference in costs between installing wall air conditioning units versus a central air system for an entire building.
Currently, air conditioners or central air are not required to ensure a rental unit is habitable in California, according to the state building standards code.
The lack of an air conditioner didn’t bother Juliana Wingate when she and her husband moved into their apartment last year near MacArthur Park. Then in late August a record-breaking heat wave hit and Wingate felt miserable.
“Our cat spent most of his time in our bathtub because it was so much cooler,” said Wingate, who recalls feeling lightheaded and nauseated during the 10-day heat wave, when temperatures topped 100 degrees.
She hasn’t thought about the lack of a cooling device this year, but now that it’s getting warm again she’s wondering if it would be better to just leave their second-story apartment.
“Clearly, if that’s not possible, I will bring it up with our landlord,” Wingate said. It’s unclear if that would mean her rent would go up, but she’s not sure she could stick it out for another summer.
“I love that every year just keeps getting hotter,” Wingate said sarcastically.
California laid the groundwork for an extreme heat action plan last year and earmarked $800 million to address the issue, but also saw a proposal to establish a chief heat officer fail in the state Assembly. A statewide warning and ranking system for extreme heat events is expected to launch by 2025, providing general information to the public, much like the way other states respond to hurricanes.
But to advocates — such as housing policy coordinator Jovana Morales with Leadership Counsel for Justice and Accountability, a Central Valley advocacy group — it feels like the emphasis on addressing climate change and strengthening heat waves is often ignored until summer rolls around and reminds everyone of the danger.
“I just don’t feel like there is urgency in the Legislature,” Morales said. “You know … we’ve been working on this, and people have been advocating for solutions, especially … in the home, but it’s just not happening fast enough.”
Morales’ group last year supported Assembly Bill 2597, which sought to update the state’s building code to set a safe maximum indoor temperature in new and existing dwelling units. Units found without cooling options would be deemed substandard, according to the bill, which failed to become law.
The proposed code update was meant to address workers who live in substandard housing conditions, where temperatures often become so hot that units are unsafe to live in, Morales said.
But Leadership Counsel was not focused solely on air conditioners. It pushed for improved insulation, increased shade through landscaping, heat pumps and roofs designed to reflect sunlight. AC units were not an emphasis because they generate greenhouse gas emissions.
“Many of the older buildings just don’t have that cooling mechanism, and so our bill would have required to set an indoor maximum air temperature,” Morales said.
Older buildings are often the only units low-income families can afford, Morales said, and they would benefit the most from updates to the housing code to require cooling standards.
City leaders directed staff to study an update to the housing code and explore potential programs to help low- and middle-income families pay for the installation and operation of an AC unit.
Fred Sutton, senior vice president of local public affairs for the California Apartment Assn., said tenants are aware of the amenities available when they sign a lease. Those tenants can and should approach their landlords if they want to have a cooling device installed in their units, he said.
But mandating that all rental units have a cooling device would push the cost onto the landlords and the tenants, Sutton said.
“I heard a lot from the city about subsidies for tenants facing extra utility costs,” Sutton said. “But what cost would that work mean for the building and the [landlords]?”
The Los Angeles Department of Water and Power offers options for low-income residents through the Cool LA program it launched last summer. Those include subsidies to help pay electric bills during a heat wave, rebates to offset costs and other resources meant to help residents weather the heat.
The requested report is expected to be presented to the City Council’s Housing and Homelessness Committee in the next several weeks.
Elvira Rincon never loved the small apartment that sits between Sunset Boulevard and Dodger Stadium. Even 30 years ago, shortly after she arrived from a small town in Queretaro, Mexico, and moved in with her husband and five children, the one-bedroom unit built in the 1920s felt cramped.
But over the decades she made it a home, planting a sprawling container garden of flowers, fruits and medicinal herbs to cure her family of stomach pains and colds. Her husband poured concrete to make a small patio in the courtyard, where they hosted birthday parties nearly every month. At $495 a month the rent-controlled apartment allowed Rincon, her children and now grandchildren to build a life in the heart of Los Angeles.
That made it easy for Rincon, 59, to dismiss the first buyout offer. A developer who bought the complex and a neighboring one last year proposed paying her and her neighbors $22,000 to leave. She did the math and figured the money would be gone in about one year in a county where the median rent for a one-bedroom is $1,600.
The second offer to Rincon and her neighbors came in February: $55,000. It was more money than she and her husband, who works in a local nursery, could ever save on their own — and still not enough to stay in her neighborhood for long.
Soon after, the ownerssent workersto tear apart a storage shed she’d had for years and haul it away, along with a barbecue and many of her plants, saying they were health and safety violations. Rincon saw it as harassment meant to pressure her to go so the landlord could jack up the rent.
Like so many others, she and her family had one shaky foothold keeping them in a rental market that was otherwise soaring out of reach, and they felt that people with more power than them were trying to shake them off of it.
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The company says it was simply making changes requested by its insurance company and that it is listening to the concerns of residents, not trying to force them out.
Even so, Rincon and her neighbors are on edge, unsure what to expect next and asking themselves whether they still have a place in L.A.
“There are times when I feel desperate,” she said. “I get frustrated. And I tell my husband, ‘Let’s just go. Let’s just go.’ ”
In a city faced with a housing and homelessness crisis, where many renters pay more than half their income to live in overcrowded, aging homes, tenants like Rincon have what many others long for: low-cost housing.
Though city and state officials are desperate to create more of it, developers are simultaneously reducing affordable units by buying out longtime rent-controlled tenants with cash-for-keys offers and renovating old buildings into pricey new apartments or condos. Many residents quietly accept the offers and leave. Others try to hold out, knowing that taking the money probably means leaving their communities or facing rent that’s double, triple or more what they currently pay. Sometimes, tenants say, that leads to harassment or pressure campaigns.
The city has adopted policies meant to protect tenants of rent-controlled buildings from being forced to accept buyout offers or being evicted for not accepting.
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In some cases, landlords are required to offer to tenants a base amount for relocation — which ranges from about $12,000 to $23,000 for long-term renters. At times, owners offer more than that. But for tenants with very little income or credit, the money may not go very far once the sky-high rent of their next apartment is factored in.
City leaders have passed rules against harassment. But advocates say the rules lack enforcement, and plenty of tenants say harassment happens anywaywith little recourse.
Rincon arrived in Echo Park in the mid-1990s, fleeing a severe recession in Mexico that left her family’s farm deeply in debt.
Her first home in the U.S. was in the same apartment complex where she lives now, just across the common area, in a unit she shared with her brother-in-law, Pedro Villegas, her husband and others. Three decades later, Villegas still lives in that apartment, paying monthly rent similar to Rincon’s, whose monthly payments have increased twice over the years to $640.
Despite language barriers, Rincon became close with her neighbors, who include an 80-year-old retiree, a nursing student, her mom and brother, and a Cambodian refugee.Their kids often served as translators.
They’ve watched out for each other’s children and grandchildren, fed each other’s pets and shared lemongrass and guavas from their gardens. Though Rincon doesn’t care for the loquat tree that grows in a corner of the property, she keeps watering it because her neighbors love the fruit.
“We’re more like a community. We have been for years,” said Virginia Watson, 80. “We all know each other. We talk. We watch out for each other. It’s very unusual for L.A. because in other places I’ve lived everybody’s kind of anonymous, in their own little cubicle.”
Once Watson retired and began living on a fixed income, she was able to stay in her home because the rent was manageable. The same was true for Rincon and her family when she injured her back and stopped working.
Villegas’ four children have lived their entire lives in the complex, roaming the hills of Elysian Park and riding their bikes to Echo Park. He works at a laundromat on Sunset Boulevard, a short walk away. His youngest is now a junior at Ramon C. Cortines school downtown.
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Like Rincon, heknew the $55,000 offer wouldn’t last long in his community.
“The cost of rent is just too difficult,” he said. “The money doesn’t go far.”
Watson lives in a studio apartment adjacent to Rincon’s. She’s been there for 20 years, lives on Social Security and a small retirement income and pays $529 a month. When she’s looked online for other studios in the neighborhood, the most affordable cost isnearly $1,500 a month, an amount that she said would take about three-quarters of her income.
She might have considered the offer to leave if it was affordable to move in the city, she said.
But “rent is really, really high in L.A. I don’t know how you would manage for any length of time,” she said.
On Nov. 8, a few months afterWatson, Rincon and their neighbors decided not to take the initial $22,000 offer to leave, the property owners, Lilac Development LLC, served Watson with a three-day notice to pay or leave, saying she had not paid her rent for the month, though she says it was paid.
Watson reported the incident to the housing department, which investigated and found the notice in violation of city code for failing to provide proper information under COVID-era tenant protections, according to public records.
One month earlier, the owners served another resident with a three-day notice to pay or vacate the property, saying they owed $86.
In that case, the housing department found a “potential violation of the Tenant Anti-Harassment Ordinance,” records show.
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In both cases, housing officials wrote letters to the owners, explaining the law.
Watson and her neighbors see this and other actions, including the workers who went to the complex twice in March, tore down Rincon’s shed and hauled away her plants, as a pattern of harassment meant to pushthem out of their homes.
“I wake up after dreaming that I’m in a battle with landlords, big companies,” Watson said.
Recently, she packed up many of her belongings, assuming she would soon be out of a home, and she has kept them that way.
“I don’t unpack them because I don’t know how long I’m gonna be able to be here,” Watson said.
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Rory Anglin and his girlfriend, Jenna Loredo, are the newest residents of the two complexes, having moved in four years ago. They pay $1,236 a month for their one-bedroom, which Anglin sees as “the last of the good rents in L.A.”
When he told his mom in Mississippi about the $22,000 offer to leave, she was stunned at the amount.
“In Mississippi, that does sound like a lot,” Anglin said. In L.A. it most certainly does not.
Even so, Anglin said they were willing to consider taking a buyout until they felt a harassment campaign against his neighbors had begun.
“The end game for me is ‘leave us alone,’ ” Anglin said. “If we decide we want to move, we’ll move. But before we do, I gotta make sure all this stuff stops. It has to stop.”
If there’s a silver lining, Anglin said, it’s that the neighbors have become even closer in the last few months, forming a tenants’ association and strategizing together to push back against any harassment.
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Sara Rose, a property manager for Lilac Development LLC, told The Times that although the company initially offered cash for keys in order to “try to get tenants paying market value,” the company was no longer pursuing that strategy and would focus on “making the property habitable for current tenants.”
The company is not trying to evict anyone, Rose said.
“It’s not something we would take further action on if it wasn’t appropriate to do so,” she said.
Rose also said Lilac Development sent workers to haul away Rincon’s shed, barbecue and plants after its insurance company “advised there was certain work that needed to be done” to get the property insured.
They plan to inspect each property to figure out what needs to be fixed. In April, a city housing inspector found several conditions affecting the “health and safety of the occupants” in Rincon’s building and issued an order to fix the problems, which include damaged plumbing, fences and paint, by May 11.
Residents say there is a long list of problems beyond what that inspection revealed: leaking ceilings, mold, broken heaters and damagedflooring.
“I think based on the feedback we’ve received so far there’s no interest from the residents” in cash for keys, Rose said. “If they are interested and they approach us, it would be something we’d be willing to discuss. We don’t want to continue reaching out on something they’ve made clear they’re not interested in.”
Rincon said the first she heard about the change in plans was from The Times.
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For a long time now, she and her neighbors have felt as if they were in a state of limbo, waiting for an eviction notice or the return of workers tasked with hauling away more of their things. Like Villegas, she has seriously considered returning to Mexico, but her husband tells her they could never leave their children and grandchildren.
There was some relief hearing that the company would focus on making their home more livable rather than on getting them to leave. But she was also skeptical.
Standing at the front of Danielle Rago and Darren Hochberg’s home in Larchmont Village, where a concrete sidewalk welcomes you, the ordinary path becomes something extraordinary as it takes you on a journey from the street, through the house, to where the sidewalk ends — at an accessory dwelling unit (ADU) in the backyard.
As nearly 3–year-old Oliver Hochberg races down the smooth path toward the enclosed backyard and ADU, it’s as though he is personifying Shel Silverstein’s beloved poem that promises magic “for the children, they mark, and the children, they know the place where the sidewalk ends.”
But it wasn’t always this way.
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“Calling all handy families, investors, and developers!” read the listing for the crumbling three-bedroom, two-bathroom home just a few blocks from Larchmont Boulevard.
Those words were followed by a bonus sales pitch: “There is also a detached structure that would make a perfect creative space, playroom, or mother-in-law suite. Bring your contractor and your imagination and create the space that you have been dreaming about.”
The listing caught the attention of Rago and Hochberg, who had been dreaming of buying a home in the popular neighborhood known for its tree-lined streets, quaint single-family homes and easy access to Hollywood and downtown Los Angeles.
With the number of ADU permits issued in California skyrocketing as thousands of homeowners add ADUs to their single-family lots, it’s not surprising the listing would emphasize the possibility of converting the garage into an ADU.
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It certainly appealed to Rago, who has a background in architecture and is the co-founder of This by That, an agency that represents progressive architects. “I like that it needed a lot of love,” says the 39-year-old. “I was excited by the prospect of creating an unexpected family compound that would complement the other homes on the street.”
Eight years ago the family — which now includes 3-month-old Julian as well as Oliver — purchased a rundown Spanish home in the Fairfax District. After renovating the home, however, they found themselves weary of bustling Melrose Boulevard and were contemplating their next big project. “We were itching to move to Larchmont Village because we were thinking about starting a family,” says Rago, citing the neighborhood’s small-town vibe.
They loved the neighborhood but, like so many couples in Los Angeles, could not afford the homes that were available. “Everything was so expensive,” Rago says with a sigh. “We had to buy a home that needed a lot of TLC.”
Using the profits from the sale of their remodeled Fairfax District home, the couple purchased the bungalow in 2019 and reached out to designers Claus Benjamin Freyinger and Andrew Holder of the Los Angeles Design Group (LADG) to help them rethink the entire property.
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Having worked with them professionally, Rago felt the designers had the right mindset to help them create an experimental compound that would accommodate not just their family but their extended families for years to come. (The couple paid for the firm’s design services and received no discounts in exchange for Rago’s professional work for the company.)
From Day One, the couple knew they wanted to convert the garage into an ADU, not to bring in extra income to help pay the mortgage but rather as a way to take full advantage of the site.
The problem with ADUs, says Freyinger as he motions to the ADU on view through the living room’s dramatic pivoting window, is “they don’t always address the entire parcel of land.” Or worse, they sit vacant.
“We wanted to preserve the use of the whole site,” he continues. “This home and ADU are very ‘Goldilocks and the Three Bears’: Not too big. Not too small.” In other words: just right.
Gone are the days of congregating around a hearth or a fireplace, Freyinger says. Today’s homes are about creating welcoming spaces where people can connect with one another. So the designers added additions to the front and back of the dwelling and cut the house into four quadrants divided by two running sidewalks, west to east and north to south. Three small bedrooms are at the front of the house, while the larger communal spaces are at the rear of the house.
Today, the 1,426-square-foot nondescript house has morphed into a 1,950-square-foot contemporary home. The kitchen, considered the household’s nucleus, soars into double-height OSB-paneled volumes. Overlapping, wedge-shaped roofs extend to provide shade over outdoor living areas, and a sunny living room overlooks the 4-foot-deep pool and ADU.
The 620-square-foot ADU, which shrewdly includes a storage-lined breezeway that can accommodate the family’s sports equipment, toys, strollers and storage bins, cost $315,150 and includes one bedroom and a bathroom.
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In an inventive move, for outdoor entertaining the designers installed a kitchenette at the front of the ADU so that it faces the yard. When the folding glass door is open, the kitchen becomes a part of the outdoor area, which “really brings the ADU to life,” says Hochberg, who is 39 and works in finance.
On the other side of the kitchenette, facing the living room, there is a built-in desk that can be opened or closed, depending on the couple’s work-from-home needs.
Due to supply chain issues during the pandemic, Rago says they were forced to “make interesting decisions that brought a new dimension to the house.” In the kitchen of the main house, for example, they installed textured plaster ceilings when plywood was scarce. Likewise, the cabinets are composed of conventional whitewashed OSB panels with a pickled finish.
To save money in the ADU, they added simple concrete floors and purchased a folding glass door from Brea-based Win-Dor at a fraction of the cost of higher-end products like Fleetwood or NanaWall. The kitchenette features inexpensive OSB panels and porcelain countertops instead of quartz or granite. “We stepped it down a notch in the ADU,” Rago says, “but it still reads consistently with the main house.”
The couple, who met in the Poconos as 8-year-olds, view the ADU as an extension of the house. They occupy it regularly while working from home or hosting family.
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“I want to spend as much time at home with the kids as I can while they are little,” Rago says.
Rago and Hochberg’s compound is all about being together and the joy that dwells at the end of the sidewalk. It provides an indoor-outdoor experience where their kids can roam free in a drought-tolerant garden filled with sages, California poppies and grevillea, and they can spend time with the ones they love.
“We wanted a space for our family, who are all on the East Coast, so that they can come to visit us and our kids,” Rago says. “I wanted them to be able to stay for a week or two and feel like they are in their own home and not looking into our space and vice versa. Now, we can’t get rid of them,” she jokes.
The ADU may serve as an extension of the main house, but it also demonstrates, through its use of conventional materials and experimental architecture, that it’s possible to “chip away at the identification of the single-family home,” with its “conservative notions of architecture and the family,” says LADG co-principal Andrew Holder.
Perhaps most impressive is the designers’ ability to create something new while maintaining the small-town feel of the neighborhood. From the street, the geometric façade stands out, but it doesn’t overwhelm. And at the end of the sidewalk? Magic.
Hoping to increase the housing supply and help families build wealth, the Federal Housing Administration on Thursday proposed several changes to its guidelines that could make it easier to buy a house with an accessory dwelling unit or to build an ADU.
The agency’s proposal would allow lenders to offer renovation loans to build ADUs and consider future rent from the unit when calculating how much a customer can afford to borrow. Under current rules for FHA-backed loans, lenders can consider rental income from duplexes but not ADUs.
The proposal would address one of the main barriers that people with little home equity and low to moderate incomes encounter when they try to get a loan for an ADU. “This is a huge step in helping us actually build ADUs,” said Meredith Stowers, a loan officer at CrossCountry Mortgage in San Diego.
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Other parts of the proposal would allow FHA-backed construction loans to be used to build a house and an ADU.
FHA Commissioner Julia R. Gordon said the agency is trying to advance two important goals with the proposal: enabling more people to own homes that include income-generating property, as the FHA does for duplexes, and increasing the housing supply.
The proposal is just a draft at this point, though, and it could change in response to public input.
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The FHA doesn’t lend money directly; instead, it provides guarantees for loans issued by banks, which increase banks’ willingness to lend and reduces the interest rate charged. The guarantees are available only for loans that stay within the size limits set by the FHA. In Los Angeles County, the maximum for a one-unit property is just under $1.1 million. (The proposal would classify a single-family home with an ADU as a one-unit property.)
Under an FHA-backed renovation loan, homeowners can borrow more than the current value of their homes if the improvements they’re planning would justify it. But the FHA will back loans only if the monthly payments are deemed affordable, which means that they can’t push the borrower’s recurring obligations over a set percentage of the borrower’s income.
That’s why including future rents could make a big difference — increasing borrowers’ income makes it more likely that they’ll be able to borrow enough money to build an ADU, which can easily cost $150,000 to $200,000.
In contrast to the FHA’s proposal, Fannie Mae and Freddie Mac — two giant, federally chartered purchasers of home mortgages — do not support loans that factor in theoretical rental income from a yet-to-be-built ADU. The inability to consider potential rental income “is a massive obstacle in helping my clients obtain loans to build their ADUs,” Stowers said. Most of her clients are using home equity lines of credit to build ADUs, but the FHA’s proposal “would allow us to offer much lower-interest first mortgages” to finance the purchase of a home and the construction of an ADU.
“This is what the vast majority of Californians want,” she said. Many of her clients are families that combine the resources of multiple generations to build compounds consisting of two houses and two ADUs, she said. “Why wouldn’t you support that? These families are building a strong financial foundation, but also social ties that are invaluable.”
Gordon said the lack of historical data about ADUs and the value they add to a property has made them a challenge for the FHA, Fannie and Freddie. “It’s a little bit of a chicken-and-egg problem,” she said — there’s not enough data for lenders to figure out how to underwrite the projects, but without the loans, there’s no way to generate more data.
“To be honest, the easiest thing to do in that situation is always to do nothing.”
The FHA’s proposal seeks to support ADUs the way the agency has supported the construction and purchase of duplexes, but with some extra safeguards. For its rapid online loan evaluations, it would allow lenders to consider only 50% of the fair market rents a new ADU could generate — with duplexes, the limit is 75% — and those rents could constitute no more than 30% of the borrower’s total income when determining how large a loan to issue.
“This is new territory, and that’s why we’re putting this policy on the drafting table to receive public input,” Gordon said.
ADU construction has taken off in California, accounting for 15% of the housing units approved in the state in 2021. But this type of project is starting to be a national phenomenon, Gordon said, as more communities grapple with shortages of affordable housing and the need to increase density.
“It’s my sense that many jurisdictions find that permitting ADUs to be a more palatable political first step in making adjustments to zoning,” she said. “That’s why I do think we will start to see more interest.”
An ADU that can be rented out and appreciate in value over the years also creates a chance to build wealth from generation to generation.
“In a more modest neighborhood, the ability of a household to get into first-time homeownership of both the unit that they’ll be occupying and the unit that has a rental opportunity can be an excellent wealth-building opportunity,” Gordon said. “Many families over the years have successfully increased their own prosperity and really the stability and prosperity of the neighborhood in this way.”
Stowers praised the FHA for moving forward and recognized the agency’s concern about going too far too fast. But she added, “All the agencies have been tiptoeing toward this moment. But my hope is they will tiptoe a lot faster.”
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Evelyn Arceo holds down a full-time job as a baker at Universal Studios Hollywood, earning $19 an hour. But even when she gets a few hours of overtime at the theme park, the single mother of four can barely afford the rent of her one-bedroom apartment in Panorama City.
On her salary, buying a home is out of the question.
Already, her monthly rent of $1,300 is “just too expensive at this point,” Arceo said, with late fees of $40 to $50 compounding her financial plight. “I don’t think I’ve ever been on time on my rent.”
Arceo’s situation is common in California, which is among the nation’s leaders in renter-occupied housing. In the Golden State, 45.5% of housing units were occupied by renters in 2020, a small increase from the 44% rate in 2010, according to newly released data by the U.S. Census Bureau.
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California was second only to New York, where 49.7% of the housing units are renter occupied. The District of Columbia was an outlier, at 61.7%.
Nationwide, the rate of renter-occupied housing units — 36.9% — is at its highest point since 1970.
“The growth of renter-occupied units continues to outpace the growth of owner-occupied units,” the Census Bureau said in a statement.
The states with the lowest renter rate — and therefore the highest owner-occupied rates — were West Virginia, at 27.4%, and Maine, at 28.9%.
Hans Johnson, a demographer at the Public Policy Institute of California, said the new data were “not shocking.” California’s high rate of renters can be attributed mostly to “the high cost of housing,” Johnson said.
The annual income needed to buy a home in Los Angeles rose last year beyond $220,000, according to a study by the residential real estate firm Redfin. With higher mortgage interest rates and inflation cutting into household incomes, the ability to own a home is increasingly out of reach for residents in Los Angeles, where the median annual household income in 2020 was just over $65,000.
High housing costs are also a factor in putting California near the bottom in another category: the rate of single-occupancy households.
New data from the Census Bureau show that more than a quarter of all households in America — 27.6% — had just one occupant in 2020. The rate of solo occupancy is more than three times the recorded level in 1940, 7.7%.
A Times analysis found that California ranked 49th of the 50 states in the rate of single-occupant dwellings, with 23% of households occupied by just one person — a rate that has remained steady for about 20 years. Only Utah had a lower rate, at 20%.
North Dakota had the highest rate of single occupancy, 32.8%. The District of Columbia’s rate was an astronomical 43.7%.
In states other than California, “where rents are much lower or the opportunity to buy a house is better, it’s not as difficult for a single worker” to live alone, Johnson said.
Another factor is California having a “larger immigrant population than in the rest of the U.S.,” according to Johnson. “It is more common for immigrant families to live in multigenerational households,” he said.
Utah has the lowest rate of single-occupant homes because the state has a high marriage rate and an uncommonly high number of children per household, Johnson said. He attributed those trends partially to Mormon residents, who make up well over half of the state’s population.
The increase in people living alone coincides with higher social isolation, a worrying trend outlined by U.S. Surgeon Gen. Dr. Vivek Murthy in a recent report.
“Our epidemic of loneliness and isolation has been an underappreciated public health crisis that has harmed individual and societal health. Our relationships are a source of healing and well-being hiding in plain sight — one that can help us live healthier, more fulfilled and more productive lives,” Murthy said.
Such isolation increases the risk of premature death by more than 60% and includes higher risks of heart disease, stroke and dementia, according to the report.
To counter the increased isolation, “communities must design environments that promote connection,” the report said, and “invest in institutions that bring people together.”
While more Americans are living alone, Arceo, 32, worries about providing her children a home where they can enjoy some space for themselves.
With a 14-year-old son in the throes of adolescence and a 12-year-old son entering that stage, “they need their privacy,” she said.
“It’s insane to say that I work for this company and can’t afford to give my kids a proper living,” Arceo said.
She has worked as a baker for the theme park for eight years, but Arceo notes that “I was homeless for the first year working at Universal,” when she was forced to live with her then-three children in hotels, friends’ homes, wherever they could.
With the bakery short-staffed, she has recently picked up “at least an hour of overtime a day,” but it hasn’t been enough, forcing her “to choose whether I pay my car insurance or my rent,” she said.
Johnson, the demographer, pointed to possible hope on the horizon. He noted that California has reported a steady decline in population since 2020 — starting at the beginning of the pandemic. The drop has coincided with the construction of more housing, primarily in the state’s suburbs and exurbs.
“If California continues to lose people and build housing, at some point it should make a dent in the housing deficit.”
A construction surge is not likely to make enough of a difference to change the conditions for low-wage workers like Arceo.
Looking to the future, she doesn’t see many options.
The “Wave House” — one of the most iconic homes on the California coast — just hit the market for $49.5 million. It’s the first time the architectural gem has surfaced for sale in 36 years.
Deriving its name from the cresting rooflines that mimic the wavespitching on the beach just below, the striking structure was built in 1957 by Harry Gesner, the late architect known for designing one-of-a-kind residences along the coast and the mountains above it. Gesner died last year in Sandcastle, another iconic home he designed for himself that sits right next to the Wave House.
He built the idiosyncratic abode for his friend and fellow surfer Gerry Cooper. In 2016, Gesner told Curbed that he drew up the design for the home on a surfboard using a grease pencil.
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“I wanted the house to have the look of a giant wave at the peak of its strength,” Gesner said in Lisa Germany’s book, “Houses of the Sundown Sea: The Architectural Vision of Harry Gesner.”
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The living room. (Simon Berlyn)
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The entry. (Simon Berlyn)
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The dining room. (Simon Berlyn)
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The deck. (Simon Berlyn)
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The deck at night. (Simon Berlyn)
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The exterior. (Simon Berlyn)
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The beach. (Simon Berlyn)
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The coastal home. (Simon Berlyn)
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Aerial view of the property. (Simon Berlyn)
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The ocean. (Simon Berlyn)
Pop star Rod Stewart bought the home in the 1970s and sold it in 1987 to record executive Mo Ostin, the Warner Bros. mogul who worked with artists such as Jimi Hendrix and Stevie Nicks. Ostin also died last year, and his family trust is handling the sale.
The home is a Modernist masterpiece, a reflection of the seaside setting that surrounds it. Drawing inspiration from natural forms, it boasts eccentric archways, rounded decks and walls of glass overlooking the ocean. Inside, a sunken conversation pit is anchored by a floor-to-ceiling fireplace under whitewashed beams.
Real estate records show the home has six bedrooms and seven bathrooms across 6,208 square feet. Other highlights include a landscaped entryway and stone courtyard.
Ostin made a few changes during his stay, brightening the living spaces with shades of blue, turquoise and white to match the seaside setting. He also swapped the pebble roof for copper shingles, which have since taken on a natural patina that matches the coastal color palette.
“The space takes your breath away, but at the same time, you feel relaxed,” said Dena Luciano of Douglas Elliman, who shares the listing on the property. “It’s stunning.”
She added that in its prime, the home served as a gathering place for big names in the music industry. More recently, it appeared in the 2019 film “Yesterday.”
Luciano holds the listing with Drew Fenton of Carolwood Estates and Compass agents Chris Cortazzo and Harry Gesner’s son, Zen Gesner.
If it sells, it’ll be the latest recent blockbuster deal in Malibu. In May, Jay-Z and Beyoncé dropped $200 million on a compound eight miles up the coast, setting the all-time price record in the state of California.