Thursday, November 17, 2005

The half-mil home

Tom Kirkendall has a great post comparing what kind of home a half-million dollars will buy you in LA vs. The Woodlands, with pictures. He links to this story in LA Times, which has some just stunning data points in that price range: 724 sq. ft? One-bedroom? 80+ year old houses in need of substantial repair?

And guess what? $500K is the median home in LA now, vs. $145K in Houston.
The California Assn. of Realtors estimates that today only 13% of L.A. County households can afford a median-priced home.
Note that's LA county, not just the city or just the nice parts close to the ocean, but the entire county, which goes substantially inland and has around 10 million people in it. (that number sounds like some exaggerated round number - like "a gillion" - but, no, it's the real number)

So what the heck are the other 87% buying below the median price? Do they make houses smaller than 724 sq.ft. and one bedroom? Isn't that called a "garage"? I know people in Houston with more closet space than that. Or do neighborhoods with armed gangs roaming the streets get you into that nice "affordable" $300-400K range?

Crazy.

21 Comments:

At 1:32 AM, November 18, 2005, Blogger Clarence said...

Tom's post has a comment w/ an interesting point re: inner loop housing -- it seems more salient to compare the price of "inner city" housing stock. We still beat LA--most lots and houses in the loop are priced at 200-400K, vs 400-600K in the inner-city parts of LA . You'll probably get newer, better housing stock too -- and less sketchy neighborhoods (at least w/ Montrose and the Heights).

To answer this --
"So what the heck are the other 87% buying below the median price?"

They buy in the Inland Valley. That's why Riverside Co., San Bernardino Co., etc. are the fastest growing counties (in numbers, not %) in the nation.

That's also why housing prices are skyrocketing in the Inland Valley -- but they're still roughly similar in price (and cookie-cutter quality) to houses around Sugar Land, Kingwood, or the Woodlands.

Of couse, if you work within LA Co, you also get a 2 hour commute... each way.

You do get one thing for your money and time in LA vs Houston, and that's three months of not-hellish heat.

 
At 7:31 AM, November 18, 2005, Blogger John Whiteside said...

Well, you also get to live in one of the most dynamic cities in North America. And that is a draw. I'm not disagreeing with Tom's point - hey, I left my 670 square foot house in DC (selling price not far below half a million) for Houston in part for this reason.

But the housing prices do speak to how desirable cities like LA (or SF or DC or NY or Boston) are to many people.

Remember also that there's a time effect. If you bought your house in LA 20 years ago, you might be trading up to one of those overprices houses without actually having a huge mortgage, because you're using the equity in your old house to pay for it. It's newcomers to the housing markets in those places that really suffer.

 
At 11:54 AM, November 18, 2005, Anonymous Anonymous said...

"Well, you also get to live in one of the most dynamic cities in North America. And that is a draw. ...But the housing prices do speak to how desirable cities like LA (or SF or DC or NY or Boston) are to many people.

If you bought your house in LA 20 years ago, you might be trading up to one of those overprices houses without actually having a huge mortgage, because you're using the equity in your old house to pay for it. It's newcomers to the housing markets in those places that really suffer."

You've got to wonder how long a city can remain a draw despite making "newcomers suffer"

 
At 11:55 AM, November 18, 2005, Anonymous Anonymous said...

It's also reflective of the cultural differences between LA and Houston when paying a premium for an "80+ year old house" is seen as a *bad* thing.

 
At 1:03 PM, November 18, 2005, Blogger Clarence said...

This comment has been removed by a blog administrator.

 
At 1:05 PM, November 18, 2005, Blogger Clarence said...

John -- that's a benefit that only works if you think that Houston's not a dynamic city. I'd respectfully disagree with you there. We've got great, vibrant immigrant communities, lots of small businesses and entrepreneurs, and a decent indie music and art scene.

There's a sort of mythology regarding SF/LA/Bos-Wash that DOES drive up housing costs (along with a tight supply of land), but that doesn't mean that cities without that sort of mythology aren't dynamic. Portland, St. Louis, Vancouver, Austin -- all are cities that are unequivocably "dynamic," but don't have an accompanying mythology that is pervasive across the US.

 
At 1:12 PM, November 18, 2005, Anonymous Dave said...

You don't even have to go to the Woodlands. A quick search on Realtor.com and I found 12 houses in Montrose for $500,000-$525,000, all of which looked in good shape (a mix of new construction and 1920s renovations) and 2,500-3,500 square feet.

 
At 1:13 PM, November 18, 2005, Anonymous Anonymous said...

mococoa,
I would disagree that Portland, Vancouver, or Austin aren't well respected as cities to live in nationwide. And housing prices and recent %-growth would support that argument.

Houston definitely has a reputation for being a sprawling plain devoid of entertainment, even though that characterization is not fair to our fine arts community, sporting venues, and downtown/medical center areas. But, there is also nothing to "see" in Houston. If you're in LA, you can easily run out of time to see all the sights. Same with SF, NY, Boston, DC, etc. Austin has a lot of natural beauty. Same with Portland and Vancouver.

While the decision to build Houston inland after the great Galveston hurricane was a wise one, it has left Houston topographically and environmentally boring.

Oh yeah, always being ranked among the worst cities for smog and traffic doesn't help the perception of our city either (though LA has enough sights and sounds to somehow make people forget that they are just as bad as we are)

 
At 5:38 PM, November 18, 2005, Blogger MichaelMcLees said...

I am always baffled by people who say that LA and NY and Chicago have culture while everywhere else doesn't. Houston does have a large immigrant community, some of the best food in the nation, a first rate economy, good schools (Rice)... etc, and culture (whatever that really is).
Why anyone would want to spend a million dollars for a decent home in Los Angeles when they could have a mansion in River Oaks instead is perplexing. Oh yeah, I forgot... LA has culture.

I'm sure that people who live in LA are good people, but if they saw my parents' luxury home on 5 acres with a pond and horses for a half million bucks 45 minutes away from most of downtown... I have little doubt they would move.

Call me crazy, but if someone makes 100k a year, they should be able to afford to OWN (not perpetually rent) a nice home.

 
At 6:30 PM, November 18, 2005, Blogger Tory Gattis said...

I am going to have to agree with Michael on the culture bafflement. If there are any "cultural sophisticates" out there that can comment, I'd like to hear it. I'm certainly not in that category, but I've got to imagine the percent of the population that would be bored by Houston's full cultural scene but excited by LA or Chicago's has got to be incredibly small - less than 1% of the population. NY might be an exception if you live for Broadway, author readings, art exhibits, etc. - but if you're kind of a normal to above average college educated person that goes to these maybe a handful of times/month, Houston should have you covered.

 
At 6:38 PM, November 18, 2005, Anonymous Anonymous said...

Am I missing something? We used to have a home in Riverside, CA and the insurance was about $400 per year. We sold that home and bought 2 in North Houston. The insurance here is about $1k. The property taxes are extremely high too. Is this why there are so many foreclosures here? Don't get me wrong I really do like Houston. But after seeing all your money go in taxes and insurance instead of equity is tough!

 
At 6:54 PM, November 18, 2005, Blogger Tory Gattis said...

According to the data here:

http://money.cnn.com/pf/features/
lists/taxesbycity2005/index.html

our property taxes are substantially below California (or at least LA).

There's also the issue of considering the overall tax burden vs. just the property tax. Texas has no income tax.

 
At 2:03 AM, November 19, 2005, Anonymous Anonymous said...

If you dont think LA has better culture than Houston, you need to take off your Houston-colored glasses.

Aside from the beautiful year round weather and top-rate public universities on par with most private schools, you have arguably the 2nd best museum in the nation, the largest entertainment sector in the US, Disneyland, famous restaurants that actors shop at, stores that don't exist anywhere else. LA is a great place to visit.

My relatives have no trouble at all keeping us entertained when we go to LA, unfortunately, the few times my relatives do come here, what exactly do I show them? The waterwall near the (former) Transco? The closing-down Astroworld? And once you've done NASA once...

LA has a lot more to do than Houston, and you pay for it with an extremely high cost of living.

And of course, LA has nothing on SF, my 2nd favorite city in the US after NYC.

 
At 2:26 AM, November 19, 2005, Blogger MichaelMcLees said...

Yes, but even if Houston isn't a huge tourist attraction because it lacks Disneyland and actor approved stores, I'm sure you wouldn't live in LA for those reasons. Really, do people in LA wake up every morning saying, "There's so much to do here, like go to Disneyland... ooh, and if I'm lucky, I'll cross paths with a star of stage and screen." Please. They get up, get dressed and go to work like everyone else.

You know as well as I do that most people in LA are working stiffs like 99% of America. And if you are a working stiff, it seems logical to live in a place where good housing is affordable. I just looked today and found several 2000 square foot luxury lofts in the heart of Houston for less than a half a million bucks. www.gunn.net

People don't live in the heart of LA in 2000 square foot luxury lofts for that. They pay millions, tens of millions...

They can have it. I just don't see the point, unless you are an actor who lives there because good work is there. Surely this counts for an infinitesimal part of the population, doesn't it? Are the working people of LA really just tourists in their own town, hoping to catch a glimpse of fame?

The reality is… the weather is just nicer. It just is. I would prefer it to be 40 degrees and cloudy everyday, but I don’t have it. People in LA have the luxury of moderate weather; Houstonians are able to afford the luxury of air conditioning, mostly.

 
At 9:25 AM, November 19, 2005, Blogger Tory Gattis said...

I too think tourism and culture are different things. And culture certainly does not equal weather. I will admit Houston is not a top weather or tourism city, but I think our cultural attractions can hold their own: museums, theater, music, art, symphony, ballet, restaurants, shopping, etc.

There may be a layer of shoppers above the Galleria-level that can only be happy on Rodeo Drive or 5th Avenue, but that's pretty rare air - and they spend a half-mil on just the garage for their house.

My own very limited impression of LA was that the culture is very superficial - all about beauty and celebrities, like E! television transformed into a city.

 
At 12:48 PM, November 19, 2005, Blogger Clarence said...

Tory's exactly right -- I'm a twenty-something college student and I don't feel like I'm missing out on "culture" by being in Houston. There are enough clubs, small music venues, interesting shops (enough so that I haven't been to the Galleria in over a year), and galleries to keep my friends and I busy when we're not working or studying.

I was born and raised in the SF Bay Area, and I hang out with friends in LA every summer. Don't get me wrong -- LA and SF are great places. That doesn't mean Houston's not a great place either.

(We just have fewer shitty tourist traps.)

 
At 3:37 PM, November 19, 2005, Anonymous Anonymous said...

As long as LA keeps creating high quality jobs and as long as it keeps having good weather, people will move there. I'm kind of surprised by the defensiveness. Houston is a great city in its own right, and we don't need to disparage LA's many fine assets just to make ourselves feel better.

And yes, most people are working stiffs, so when they get off of work, they want something to do. And having beautiful weather to go to the parks or museums or one of the many entertainment venues in LA make it a great place to live. Even with all the smog and high cost of living, everything else about LA seems to drown those negatives out. Unfortunately, when people think of Houston, smog, pollution, and sprawl is all people think about even though we have so much more to offer than that.

 
At 9:11 AM, November 21, 2005, Blogger kjb434 said...

I don't know about you guys, but when I think of Houston I don't think of smog, pollution, sprawl, and traffic. Why are these things in peoples minds?

We're just another big city with our own character, charm, and personality. I love the fact that this city isn't a tourist haven. This city also has plenty of places to go and things to do when visitors come. I don't know what some you guys are missing. If all you can think of is the Waterwall and NASA, then you haven't truly lived in Houston.

 
At 2:00 PM, November 21, 2005, Anonymous Anonymous said...

Well, the reason Houston is not a tourist haven is the same reason we won't get an Olympics or get another Super Bowl here-- there's nothing to do here that is unique. There's a lot to do here if you're a Houstonian, but if we're not talking Rodeo season, there really is nothing for people visiting to see here. This is completely unlike California or Florida.

 
At 6:30 PM, November 21, 2005, Blogger Tory Gattis said...

Just an observation, but Atlanta got the Olympics without being a tourist city. I still don't think we'll get it because of our weather, but it is possible for non-tourist cities to get it.

 
At 6:54 PM, November 25, 2005, Blogger Andrew said...

I refuse to drink the Houston cool aid but to compare LA and Houston is silly.
Houston is not visually beautiful, we have no hills or mountains or a beautiful beachfront but Houston does have a great attitude.
This is something LA lacks. LA is very "all about me".
Yes, folks pay a premium to live in beautiful California but you have to give Houston credit for a great cost of living and having a great can do spirit.

 

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