Betsy Friedlander, 66, and Mike Klipper, 67, are facing an increasingly common problem. After spending three decades in the suburbs, raising two children in a home they built, they decided it was time to downsize. The couple wanted a new home and a new lifestyle.
“I think we wanted to have more of an urban life, if we could be downtown and walk to everything, that would be our preference,” said Mike.
But after an exhaustive search, they’ve given up. They were shocked to find one bedroom condos selling in the $1 million range, not only in Washington D.C. proper, but in downtown Bethesda as well.
“We started looking in D.C., and we were shocked, absolutely shocked, because we thought we would be able to sell our house and put a little money in the bank, and buy something we would enjoy,” said Betsy. “Even if we went up a substantial amount, we didn’t see anything that we could feel comfortable living in.”
Even a lateral move doesn’t make sense for the couple, for the same price their home was appraised for, they would get less than half the space and still have to pay large condo fees. “Here we stay!” said a regretful Betsy.
The problem of housing affordability isn’t unique to baby boomers entering retirement or experiencing empty nests, it’s also hitting the overall housing market hard. Market experts had long predicted that when these boomers downsized from their large suburban homes, it would provide the market with a much needed increase in affordable inventory.
But the long imagined ideal of downsizing to a walkable urban center with more access to a cultural and active lifestyle is simply not affordable to most in today’s market. As these boomers stay put longer, a huge shortage of inventory is keeping the market incredibly tight. And with rents at record highs nationwide, going the rental route won’t provide any relief.
“Fifty percent of boomers feel like they can’t get out of their house, and that’s limiting supply,” said real estate agent Jane Fairweather. “So the houses that we’re waiting to come on the market, for the young families that are trying to move into the good school systems and the good neighborhoods, aren’t coming on.”
According to Realtor,com, inventory in January of this year was down nearly 10 percent from a year ago. Low inventory is pushing prices even higher for listed homes, as bidding wars erupt over limited supply.
In a vicious circle, these higher prices are sidelining not only first-time buyers, but as prices continue to increase, mid-level buyers are finding themselves priced out too. In no city in the U.S. is this more of a problem than Los Angeles.
While your New York and silicon-crazed San Francisco friends may complain about astronomical prices per square foot and shoulder-to-shoulder packed open houses, Los Angeles is statistically the most expensive place to live in America. Low and stagnant wages and a seemingly unstoppable rise in rents, have made for a bleak real estate market for most Angelenos.
While the luxury market continues to shine brighter, single family homes in even mediocre areas are seeing asking prices well above $500 a square foot. In many neighborhoods, especially the few in Los Angeles with access to good public schools, four figure prices per square foot are the new normal.
It seems the only hope is an improved economy. Unemployment numbers are improving, but more jobs doesn’t necessarily mean better jobs. Either wages will have to improve, or some other unforeseen force will have to change the economy, either on the local or national scale, for Los Angeles to approach affordability.
If you’re in the market to buy or sell a home in Los Angeles, please don’t hesitate to call us at 323-829-8811. Or email Susan Andrews at susan@luxurylahomes.com.
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