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Tuesday, Mar 5, 2024

Seeking Suburbia

The catchphrase “live/work/play” captures the strategy of real estate developers appealing to younger workers, often in the tech and entertainment industries, who want a walkable urban lifestyle near their employment. But Valley residential brokers report anecdotally that young adult homebuyers — millennials and younger — are trending away from urban apartments and condos in favor of suburban homes. And while the COVID-19 outbreak has helped spur people looking to escape density, the brokers confirm that, in fact, a steady stream of outbound folks have trickled out of downtown Los Angeles during the past couple of years to areas such as the deep San Fernando Valley, Santa Clarita Valley and especially Antelope Valley, where housing is newer, bigger and much cheaper. COVID-proof housing The housing market in the national economy has proved surprisingly resilient in the past three months as the country was abruptly forced into a deep recession by the pandemic, according to a report from CoStar Group. While home sales are still off their multiyear peak reached in January, housing sales were up year-over-year in May, despite record unemployment and shrinking paychecks caused by the pandemic. “The market has not changed in terms of prices; they have not gone down,” said broker Grace Kim in the Woodland Hills office of Century 21 Peak. “The only thing that has changed is the interest rates are so great. It’s a motivation to get started on the process.” As a broker, Kim covers a wide berth of the San Fernando Valley, from Valencia and Newhall in the Santa Clarita Valley to the Conejo Valley and Simi Valley to Woodland Hills, where her office is located. At 28, she herself falls into the demographic of homeowners foregoing the live/work/play allure of amenity-laden apartment buildings for suburban sprawl. She lives in Chatsworth. “When I first purchased my property at 26, I wanted a bigger space,” Kim recalled. Her friends at the time encouraged her to move to an urban area. However, she didn’t want to live in a condominium in downtown Los Angeles or Koreatown. “It’s too saturated for me,” she said of city life. She added that within her younger client pool, she had begun to see younger people trending in her direction. “It was already happening (before the pandemic), but the virus has really stimulated people to move out of the city,” she said. “In some people’s minds, they want more space. A lot of my buyers, even couples without kids, we’re very into our pets and we want a backyard for our dogs.” In Chatsworth, Kim has found “a kind of suburban quiet, not too much traffic” and she can still go into the city whenever she feels like it – a logic common to her clients. “Because we do have public transportation and Uber, they can live in suburban areas, go to cities to have their fun,” Kim said. Century 21 Peak realtor Dafna Tene covers Hollywood, West Hollywood and West Los Angeles as well as the most affluent neighborhoods north of the 101. Lately, she said, young couples have been buying homes in the West Valley. One young married couple, who grew up in Calabasas and had a $1 million-plus budget, searched for homes around Sherman Oaks and Valley Village. What she heard from them, she said, was ‘I want to live in the city where I can walk places. I want to be in a lively environment.’” She is also in escrow with a nurse and a photographer whose budget wasn’t so high. “We found them something in Thousand Oaks with a big house,” Tene said. Ultimately, Tene feels that there has been a shift for many young adults from the city to the valleys. “In the past two weeks, there is a big awakening in the real estate market. Yes, people are trying to get deals,” she said. As for sellers, “if they price their house well, they will close to their asking price,” Tene said. She has noticed some young couples itching to get out of their housing complexes in the wake of the outbreak. “I hear a lot of people who lived in condos and apartment buildings, they’ve moved out,” Tene said. “They don’t want to deal with an elevator.” In the opposite direction is the desire to cut commute times. Tene had one young couple with a large home in Santa Clarita who said, “We can’t do this anymore.” The couple relocated to Beverly Hills to cut their commute and access the very good school system. But even these homebuyers moved into a house, not an apartment or condo. Destination: Palmdale Antelope Valley has become a big beneficiary of the recent bump in local homeownership. Despite the virus crisis, Century 21’s Kim has found business relatively steady during the past three months. “I’m an active prospector. I cold-call two or three hours a day,” she said. Among her younger clientele, she has identified a pattern in terms of where people from the greater Los Angeles market are looking to purchase a home. “I find a lot of them going to Palmdale,” Kim said. “It’s a lot more affordable there. You can get more bang for your buck. You can get a beautiful backyard with a lot of quiet.” And you can still be within a relatively short commute to the San Fernando Valley and L.A. proper if necessary, Kim added. The commute question is where the pandemic comes to play. As companies have shifted to work-from-home mode, workers realize that they don’t need to go into the office every day. “I find that 90 percent of my millennial friends are working from home,” said Kim, who added that she has sold at least a dozen homes in Palmdale since November. “The blanket response is that it’s more affordable,” she said. By buying in the Antelope Valley, many of her clients can forego a condo or townhouse, where homeowner associations often limit the number of pets they could keep. “They want to get a more affordable single-family house, they don’t want any complaints,” Kim explained. Added Tene: “I just got a client looking to invest in Palmdale as income property.” Although Lancaster is only a few exits north of Palmdale, according to Kim, Palmdale has so far proven a more popular with prospective homebuyers. “People prefer Palmdale,” Kim said. “There are more things to do there, newer properties.” Affordability One pair of brokers well-versed in the submarket is Mick and Julie Perez, a couple who work out of the Keller Williams Realty office at 1401 W. Rancho Vista Blvd. in Palmdale. The Perezes — who have been married for 24 years and have been in the real estate business since 2003 — have seen a surge in recent months of people buying Palmdale homes. “We have several,” Julie Perez said. “(Client) Evan just moved from the San Fernando Valley – he and his wife and their baby.” The reason this young family moved there, she said, is simple: “Antelope Valley is the most affordable place to buy a home.” Data from real estate research firm Redfin confirm Palmdale’s price advantage. The median price of a home in Palmdale in June was $355,000, an increase of 12.7 percent in the last year. By comparison, the average price in Santa Clarita was $565,000, up 4.6 percent in a year. Burbank came in at $860,000, an increase of less than 1 percent. In downtown Los Angeles, the average dwelling cost $560,000, a decline of 8.6 percent in a year. Not only are houses cheaper in Palmdale than in L.A., but “they’re getting newer and larger homes,” Julie Perez said. In fact, the Perezes said that the momentum of upwardly mobile adults in their 20s and 30s moving to Palmdale has been picking up during the past two years. Some are lured by the aerospace and military defense industry prevalent in that area. This year alone, Julie Perez said, she has helped three couples move to the area. One person works at Edwards Air Force Base north of Lancaster; the other two work for Northrup Grumman in Palmdale. Mick Perez added that there’s also been a steady stream of seniors coming in. The couple feel that the virus scare and attendant plummeting interest rates have definitely helped stimulate business in their direction. “As soon as March hit, we got really busy,” Julie Perez said. “Since the pandemic, we’ve closed (a dozen homes).” Mick Perez also pointed out an important dynamic at play in Palmdale, where it is more expensive to rent a home than buy one. While renting a home in Palmdale may range between $2,200 to $2,500 a month, he explained, a mortgage may only set a homebuyer back $1,800 monthly.

Michael Aushenker
Michael Aushenker
A graduate of Cornell University, Michael covers commercial real estate for the San Fernando Valley Business Journal. Prior to the Business Journal, Michael covered the community and entertainment beats as a staff writer for various newspapers, including the Jewish Journal of Greater Los Angeles, The Palisadian-Post, The Argonaut and Acorn Newspapers. He has also freelanced for the Santa Barbara Independent, VC Reporter, Malibu Times and Los Feliz Ledger.

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