Sign of the times: 'For Lease'

A lack of qualified buyers is among the reasons given for the conversion of downtown's Chapman building from condo to rentals in a story posted Wednesday at latimes.com:

In the midst of a downturn in the real estate market, some developers are finding that they no longer can sell condos in buildings that even a year ago would have been quickly snapped up. Flummoxed by a precipitous drop in qualified buyers, they are choosing to rent out their buildings instead.

It's happening in downtown Los Angeles, and to a lesser degree in Hollywood and the San Fernando Valley -- areas where high-density housing has sprung up in recent years.

Others in the same boat:

Projects that recently converted from condo to rental include the Larchmont Lofts, Universal Lofts, the Brockman, 1010 Wilshire and Artisan on Second downtown. Experts say that they expect to see more of the reversions in the coming months.

It seems some of the potential buyers at Chapman, for example, ended up losing their jobs or couldn't get their loans after lenders changed their guidelines. Hitting the nail on the head, the story concludes:

Given the economic uncertainty and falling home values, some residents who once thought of buying downtown are happy to be renting for now.

Makes me wonder if the rents on these buildings will start heading down too. The range given in the story was from $1,500 to $4,500 a month. Sounds high to me for concrete and congestion.

-- Lauren Beale

Thoughts? Comments?

Photo: The 168-unit Chapman Flats building at 8th Street and Broadway in downtown Los Angeles will be rental units. Credit: Spencer Weiner / Los Angeles Times

Comments

[Laker]

Lauren,
This conversion of units to rental all over LA will increase the available rentals at the same time that people leaving LA and California in mass. The conclusion is only one. Rents are heading down big time.
I already mentioned today that i negotiated my rent down about 10%. Today in the evening, i spoke to a friend that did similar thing in his nice prime Tarzana apartment building. He used to pay $1600 and got his rent reduced to $1300. 300/1600 = that is almost 20%...Now i feel a loser. I think I'll give my landlord another call....
I think the 4/2 house in the SFV should rent for $1600 as it should cost about $250,000.

[MyLessThanPrimeBeef]

One needs a lot of roommates to cover that $4500 a month rent, but I am sure the landlord will look the other way. You do anything to survive these days.

[syscom3]

With cheap gas again, it makes more sense to buy a home in an area with low crime, good schools and a local govt that actually works.

Why would anyone want to live in downtown LA is a mystery to me.

[Jo]

This sounds like a natural progression to "city" style living. Most cities comprise mostly apartments and rentals. The landscape is vertical, and amenities and work are closer. With the cost of land so high and the commute from suburban areas being affected by oil prices, I think downtown LA is going to become a much "cooler" place to live. Loft style living is already there, so now they need more restaurants, shops, gyms etc.

[Tom]

Lauren:
Rents in Los Angeles area should decrease significantly in next couple of months: supply ofr rental property increased because many oweners who couldn't sell now renting plus people losing jobs and either leaving expensive areas like LA or move back with their families. Most of people with at risk jobs like retail workers are renters. In other hand, gas price is now much lower than a year ago so back to commuting to nicer neighborhodds with much lower rents make more sense. So I belive rents should be decreased 10-30% compare to last year.

[Drew]

MLTPB writes: "One needs a lot of roommates to cover that $4500 a month rent."

It may come as a shock to you, but not everyone is a recent college grad working at Starbucks.

Though I agree that $4500 for an apartment is w-a-a-a-y too expensive!

[TrojanDLA]

$1500 is way too high for a 900s.f. loft with no parking.

I expect to see rents at $1000/mo. for 1000s.f. by the end of 2009. SC students will love this.

[Drew]

TrojanDLA sates: "I expect to see rents at $1000/mo. for 1000s.f. by the end of 2009."

And in which ghetto neighborhood with nightly drive-bys do you expect to see this?

Where I am, a 2br/2ba apt with 1000 sq ft is going for $3000 -- and asking prices on rents have increased, not been reduced.

But I agree that apartment rents are way too high, especially when you can rent a house for about the same amount of money.

[sfvrealestate]

No surprise to me that this is happening. See my post at http://sfvrealestate.blogspot.com.

[Ace]

sfvrealestate,

Did you post a blog on your site about this blog post and then post a comment here about it?

I don't always get blogging. Are original ideas that hard to come by?

[Purple Tentacle]

The interesting thing about 1010 Wilshire, however, is that EVERYthing is paid for and the place is fully furnished (including pots, pans, dishes, flatware, etc. They even provide sheets, towels and bathrobes)-- and they don't charge extra for parking (24 hour valet). That helps when you have two cars.

A year's lease brings the price down there, and you can claim 67% of your rent on your taxes as a business expense if you have your own business. In my case, that would be over $26k a year for that deduction alone.

In this economy, every little bit helps.