Downtown blues: Rough edges, falling prices

Downtown L.A. residential real estate is suffering more than the city as a whole, the L.A. Times reports tonight in a story that questions whether the much-heralded revival of the city center is really happening:

"Prices of condominiums, which dominate the downtown market, have fallen more sharply here than in Los Angeles and Orange counties overall, according to DataQuick Information Systems. More than one-third of the residential projects approved by city officials have been sidelined."

Telling anecdote: Developer James Osterling is working on a residential project in Chinatown, but isn't interested in living there: "Though he calls himself 'a huge believer in the renaissance in downtown Los Angeles,' he likes his Altadena house just fine.  If he did downsize, 'I'd probably get a condo in Pasadena,' he said. 'It has the theater, restaurants and culture without the rough edges of downtown.'

Rough edges.

Random personal observation: I've been working downtown for 3 1/2 months now, and the thing that strikes me is the lack of shopping. It's pretty much a retail dead zone. Just before Christmas I was trying to sneak in some lunch-hour Christmas shopping, and after a couple of attempts came to the conclusion it couldn't be done downtown, which surprised me. I don't know of another big American city where that's true.

Thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: L.A. Times.

Comments

[Sean]

They still have a long way to fall. I heard reports that the president of Freddie Mac said today home prices have declined only 1/3 of the way.

[E]

L.A.'s downtown has always been dead with the exception of cultural events (the opera, disney hall, Mark Taper forum.

However...I think that for the most part that most people would rather live in a house with a yard in L.A. Condos were never really a good investment anywhere in L.A. (bubble years excluded).

I knew that they were headed for trouble a long time ago when I came across this website about a year ago.

Housing Cancer...coming to a neighborhood near you soon!

1100wilshire.com

[Susan]

Macy's? Little Tokyo? The Library, MOCA and Disney Hall gift shops? I shopped in all those places for gifts this year, and loved it.

[peter m]

I have spend a lot of time in downtown LA during the boom construction phase in 2004-2007. Seen all those hi-rises going up along grand /flower sts in south park district near staples. Also the newdevelopments in the west central district along wilshire west of the 110.
This was pure speculative building by the dwtn boosters who had not a clue as to the fact that LA Dwtn is simply a concrete-encased dead zone with buildings as inviting as pillboxes & fortresses.
Nothing can alter dwtn LA's ambience unless U raze large parts of the eastern ' edge' districts such as the warehouse district and the fashion district and replace them with greenspace. And somehow transpant the homeless population out of there . Never going to happen so LA dwtn is what it it; a forlorn barren concrete- paved maze enclosed by 4 fwys which create effective constricting barriers and from which rain tons of auto/truck pollutants into dwtn, which is why u get that pale yellowish nasty dwtn air.

Is It surprizing that that dwtn LA condos are now begging for buyers?

[Dr. Christopher Eaton]

The L.A. Times coverage of urban development has just devolved continually during the past year. The nature of this coverage is disjointed, apoplectic and simply lacks cohesiveness. Earlier this week, as in YESTERDAY, the Times reported on the renaissance of Wilshire Blvd. from Downtown to Koreatown, as evidenced by projects like 1010 Wilshire in downtown and the Solair on the western side of things. Furthermore, the reporting is simply lazy, relying on quips and anecdotal evidence rather than hard reporting and on sensational headlines like, "Down on Downtown". This article cites a couple who wants a yard, a Pasadena homer who pines for the sanitized climes of that burg to the north, and someone who likes his Altadena home "just fine" as evidence that the downtown residential renaissance has stalled. None of these fine folk typify the type of buyer or renter in downtown, most of whom loathe the idea of owning a yard and almost none of whom hold illusions about the rough edges around the neighborhood. While the article begrudgingly notes that the population of downtown has exploded and outpaced all of Southern California for several years running, it chooses to focus on a price slump which has hounded the entire country. It fails to make mention of the new Italian grocery store opening on 7th street, the new financing that the Grand Ave. Project has just received from the Royal Family of Dubai, and the synergy and energy being created in so many parts of downtown. It doesn't make mention of the growing connection to its surrounding neighborhoods (USC, East L.A., Chinatown, Echo Park and Silverlake and Koreatown) via mass transit, housing and nightlife). And the post by E above is just the absurdity frosting on top of an absurd article. A simple grasp of the past enables one to understand the critical role that this neighborhood has played in the development of the city as a whole and how even in its leanest years served as the vibrant home to some of the largest and most fantastic wholesale and manufacturing districts in the country, including the garment, jewelry, produce and flower districts. I am moving from Silverlake after living here for 14 years to downtown because I don't believe that there is a more exciting and evolving neighborhood in all of the country currently. Its long-term potential is stellar.

[Dr. Christopher Eaton]

And Peter, I want you to highlight in one of your columns all of the many things in Downtown which you can't find or buy in your Westside neighborhood. If you don't know what these things are, then perhaps you shouldn't be covering Downtown in this blog?

[srla]

It seems that the downtown "resurgence" didn't happen quickly enough. The bubble burst before the redevelopment of downtown reached a critical mass.

However, I seriously doubt that with areas like downtown declining rapidly in price, surrounding higher priced areas will not be soon to follow. The entire regional real estate market is interconnected - prices plunging in downtown and the I.E. will inevitably lead to prices plunging on the Westside too.

The greater the differential between low priced and high priced areas grows, the higher the likelihood that buyers will flee to lower priced areas.

Does anyone really think that a place like Torrance will retain its bubble-inflated prices? Will people really continue to pay 900 grand for an ugly starter home in Torrance when there is little chance that their property value will appreciate substantially in the near future?

The market is driven to a large degree by perception, and thanks to years of relentless real estate cheer leading in the press over the past decade, the perception of the upper middle class will take a while to change, but change it will.

[Paul]

Don't worry, one day you'll be able to take the Gold Line to Victoria Gardens in Rancho Cucamonga.

[Robbie Fields]

When I worked at and took the RTD to The Times ...

The city's finest emporia were The Broadway and May Co. on 7th and 8th streets downtown and a bit further, the mind bogglingly magnificent Bullock's Wilshire your side of Vermont. Oh and Magnin's, too.

Are they all gone?

Then there was the fascinating ersatz Tijuana shopping experience to be found much closer to The Times on Broadway. Has that crowd moved on, as well?

Having spent the past Christmas holidays in Chicago, it was a revelation to see the hordes of suburbanites delighting in the stores of The Magnificent Mile in Chicago. Is it tradition or did the planners there actually get something right? On the other hand, State Street Chicago isn't looking too great these days.

[brettdl]

The thing that always struck me about downtown L.A. was the number of homeless living in cardboard boxes.

[john]

I have rented a loft across "Little Tokyo Lofts" for over 20 years and I think I have a good grasp of the what this neighborhood is about.It's a dangerous place,full of drugs and crime. When the "developers" overhauled the Westinghouse Bldg across the street all of us at 443 S San Pedro had a good laugh at the specter of $2.00 per sq ft spaces right off 5th st in SKID ROW.Then some suckers from San Diego bought the bldg to convert to condos to sell at million dollar prices. We couldn't believe it. Now reality is setting in for all concerned. I feel for anyone who purchased here. At least if you rent you can leave free and clear.The original developers (Peterson and Tansey)made out like bandits.

[Jane]

How anyone can pay those prices to live in a box downtown (even a nice box) is beyond my comprehension.

I was walking in one of these areas a couple of years ago a block or so away from one of these “toilet in the sky” developments and a bum was urinating on the street - in broad daylight! Nice.

I had some friends who “invested” in some of these units because it was “really going to be great - no way they can go ever down because everyone will be lining up to move downtown.” I am sure at this point they wish they hadn’t.

Until skid row gets bulldozed into the Pacific Ocean I would not expect any “redevelopment” to ever be more than very short lived.

[MarkEMark]

In any of those areas where the nice buildings are – you are never more than a short walk away from a really scary area. I have never been on a walk at night through there but you would probably need a gun and body armor.

[fedupinLA]

Having lived in LA my entire life, I predicted this concept would be a disaster! Downtown may be a great place to work, but at 5:00 the goal is to get the heck out of Dodge!

The condos and lofts are prison-like structures of concrete and steel with NO curb appeal!! What are you suposed to do on week-ends if you live in one of the concrete boxes...take leisurely strolls around the concrete jungle neighborhood???

The stench of skid row, the Tijuana atmosphere of the surrounding streets, and the overall depressing ambiance is NEVER going to disappear.

I don't even enjoy going to the Music Center much anymore...too much congestion and traffic.

When are the morons in City Planning going to realize that they have ruined this city? Mid-Wilshire looks like the aftermath of the Korean war; downtown is a multi-cultural skid row; and the Westside is looking like Calcutta!

LA is unrecognizable! And we we the dubious honor of having the worst streets in the nation, and the worst school system in the nation! Congrats, Tony Villar!

[John T Watts]

Along with all the stories about homes that are not selling must be a lot more stories about the people who aren't buying them. Is there a lot of future demand building up? There was a recent story about how young people are continuing to live at home with their parents for a longer time. How long can that go on? What happens when they marry and start having children? won't they want their own home? And what about the people who are continuing to rent while waiting for the bottom? Are they building up down payment money? When the bottom is finally reached, will there be a huge surge of unmet demand?

[arun]

Mr. Viles:

Your comment about the lack of outlets for shopping in Downtown LA smacks of a certain westside white-bread classist attitude, that evident among those who view downtown merely as that small section around the music center and its environs.

Shame.

Had you turned to face south you would have had ample opportunity to fill your stockings in the Garment district, the Jewellery District, California Mart, the Grand Central market, any one of hundreds of retailers along Los Angeles or Broadway, etc, etc.

[xtine]

I work a few blocks from you Peter, and what kills me is the lack of places to get a decent meal, unless you want tacos or Jack in the Box every day. And how often can you eat at Blue Star without going bankrupt? I got so bored with my lunch options I brown bag it (helps me save for a downpayment in any case)

Shopping is viable if you want to go to the produce mart, and there is apparel at the "fashion district" on Olympic and Maple. But if you want to go to Banana Republic or something like that, you're right, you gotta truck up to the Grove.

I have a friend who rents down here and she says at night she feels trapped. And there's not a supermarket in sight.

However, being from NY, there's a lot of traction to "downtown living" for me. There's something comforting about the grit, the alleys, the brick buildings, the moving clubs and the boop boop of the trucks backing up at 3am.

That's just me....

[NationalBubble.com]

There is definitely more pain ahead for the housing market in SoCal. Areas like downtown are going to suffer even more.

http://tinyurl.com/2an55a

[tom]

I think downtown is doing fine. It is not for everyone and no one said it would be "complete" by this time. It is a prcess and will take another decade to really be in its own. But great progress has been made in the last decade. Remember that only 9 years ago, the city passed the adaptive reuse ordinance and now some 20,000+ new residents live there. Prices will probably come down a bit, just like elsewhere. The retail is a problem, but many new restaurants and shops are on their way now. I don't know why the LA Times always has to do these doom stories on downtown.

[Susan]

Funny, I don't remember anybody complaining about sensationalist headlines and anecdotal stories while home prices were still appreciating 20% a year.

[Uncle Billy]

Dr. Christopher Eaton and Downtown will be very happy together.

[heyjoe]

Comparing downtown L.A. to the Westside is like comparing apples to oranges. They appeal to different groups. One man's concrete box is another man's castle. I appreciate both. I wish I was wealthy enough to afford the concrete box on top (penthouse) and get the rooftop yard too. I think downtown prices will continue to fall. Look at the stock market for 2008 ... real estate is on the trailing edge of this pattern. When the stocks start to turn, then I'll take a more serious look at L.A. real estate.

[Tim K.]

If it cost the same to live in Pasadena vs downtown LA, where would you live? If you believed Pasadena was going to turn into a slum, would still make the same decision?

Almost everyone I've met seems to agree that Pasadena is not going to turn into a slum, nor is it on its way to becoming Manhattan. They all seem convinced it is going to stay more or less exactly the way it is.

However, Downtown LA is a completely different story. Everyone I know either believes downtown is on a one way ticket to crapdom, or is on an inevitable course upwards to become the gleaming vision that is all over those LA Live promotional materials. No in-between. And I think that is the problem with the perception of Downtown LA - if you project the way it looks today into either of those directions, the value of living downtown is VASTLY different.

To those who think it's going up, they grasp onto every fine detail of improvement, notice every single square foot of space that is "not so grimy as last week" and get happy over noticing hey, there are just fewer bums on this corner that weren't there before.

To those who think it's on its way to hell, the comfort of knowing that the garment district is just a few blocks away is nothing compared to the Trader Joes they used to walk to before.

But that's the problem with Downtown Condos. They are priced TODAY as though the gleaming future of tomorrow is already here. And that's what stings when people who are not so convinced that downtown's positive future is inevitable. It's not worth the risk.

[CD]

With the 200 millions we just dumped on wall street we could have built some nice shelters and rehab facilities for the homeless...We had the" loft" conversation about 6 months ago here . I agree with John who is renting in Little Tokio. I wanted to believe in downtown, went to all the coktails events, the Dwell magazine, Modernica soiree, biscuit lofts, toy factory lofts blablabla....Everytime I would walk out in the street night or day, homeless people were busy removing the lice from each other 's body, or having a bowel movement in the back alley. No secured parking available. So sorry, it is skid row after all, it is their" milieu" The mission has always been there...Beside when the dust settles after this financial nightmare on wall street, the population of homeless will have grown X10. Reserve your Cardboard box ,extra long for those comfy winters downtown......

[Mike G]

I think the obvious point is that those that would be attracted to a downtown lifestyle -- the young, the childless, those too busy for any sort of maintenance or yardwork, the retired -- need cheaper units than those being sold.

I don't think the downtown renaissance is a lie, but, for most people $600k properties are move-up type properties. And by the time most families can stretch to that kind of money, there are usually kids involved, which makes downtown undesirable.

Downtown needs to focus on first-time buyers and retirees. (Or, it needs to build a miraculous, fantastic, safe charter school that will serve to attract families.)