In terms of the effects of change on real property, ordinary physical deterioration and market demand show the four stages through which an improved property will pass:
1. Growth-When improvements are made and property demand expands.
2. Equilibrium or Stability- When the property undergoes little change.
3. Decline-When the property requires an increasing amount of upkeep to retain its original utility while demand slackens.
4. Revitalization or Rehabilitation- Which may occur if the demand increases, serving to stimulate property renovation.
Here’s a little flow chart I made ;-)
The first three stages of a property's life cycle are also termed development, maturity and old age. The principle of growth, equilibrium, decline and revitalization can also apply to entire neighborhoods.
Los Angeles’ neighborhoods are ever changing. One example of this is downtown Los Angeles. It’s gone through many cycles of change. It currently is nearing a peak with all the new construction and rising interest rates. Read this article as of today’s date of April 5, 2017.
In a year or so there may be an oversupply of luxury apartments, condos and lofts like there was during the great recession which started November 2007. DTLA properties went down just a little over 50%. Some luxury loft projects which weren’t finished at least six months before this date were foreclosed upon. HOAs even went bankrupt. Some luxury loft buildings became rentals instead.
A real estate cycle which irks renters in the DTLA areas is “revitalization.” They like to call it “gentrification.” Gentrification is defined as “the process of renovating and improving a house or district so that it conforms to middle-class taste.” Renters are upset that the area has improved, new luxury condos were being built and more importantly their rents have risen or they’re being evicted so the building can be torn down and a larger, nicer one built. They feel their rent should stay the same even though there’s new development, new stores, boutiques, coffee shops, more people, more demand for housing and appreciation in property values.
It’s never the property owners who complain about their property values going up. It’s the poorer renters who intentionally moved to the area to take advantage of the low rents in a debilitated area. Some of these “artists” living in “lofts” even have the nerve to state they are the reason why the area improved in value. They are never the reason why the area improved. They merely took advantage of then low rents during that cycle.
Instead of complaining these people need to move to another area with low rents. That’s why some “artists” moved to Santa Ana, Anaheim, Long Beach industrial areas. They’re cheaper than LA. If they want to forever pay low rents they’ll have to ride the real estate cycle or wave. If they want to take advantage of this cycle, they can work hard, save money, buy property in dilapidated areas and ride the wave as values increase.
The cause of revitalization is an increase in demand for the area. That is caused by people being pushed out of more expensive adjacent areas into surrounding less expensive areas. It's about money. Someone can no longer afford to live in West Los Angeles so they moved to nearby less expensive Palms. They can't afford DTLA rents so they move to less expensive West Adams or USC adjacent. It's basic supply and demand.
Mary Cummins
As a seasoned real estate expert with an in-depth understanding of property life cycles and market dynamics, I can confidently delve into the concepts discussed in the provided article.
The article outlines the four stages of a property's life cycle: Growth, Equilibrium or Stability, Decline, and Revitalization or Rehabilitation. This model mirrors the principles of development, maturity, and old age. Moreover, the same principles extend to entire neighborhoods, shaping the urban landscape.
The dynamics of Los Angeles' real estate market, particularly downtown Los Angeles (DTLA), are used as a case in point. The city has experienced cycles of change, and the current state of DTLA is characterized by new construction and rising interest rates, indicative of a phase approaching its peak.
The mention of oversupply of luxury apartments, condos, and lofts in the near future draws parallels to historical events, notably the great recession of November 2007. The impact on DTLA properties during that period is highlighted, with some luxury loft projects facing foreclosure, and homeowners' associations (HOAs) going bankrupt.
A crucial aspect of the article is the discussion on "revitalization" or, as some residents term it, "gentrification." Gentrification is defined as the process of renovating and improving a district to align with middle-class tastes. The article delves into the discontent among renters, particularly in DTLA, where improved infrastructure and new developments lead to rising rents and potential evictions.
The narrative emphasizes the perspective divide between property owners and renters, with the latter group, often described as "artists" living in "lofts," feeling the brunt of increased property values. The article challenges the notion that these renters played a significant role in the area's improvement, asserting that they merely took advantage of low rents during a particular cycle.
A solution proposed to dissatisfied renters is to adapt to the real estate cycle, either by relocating to areas with lower rents or actively participating in property investment to benefit from increasing values. The cause of revitalization, according to the article, is an increase in demand, driven by people being pushed out of more expensive areas into adjacent, more affordable neighborhoods—a fundamental principle of supply and demand.
In summary, the article provides a comprehensive exploration of real estate cycles, the impact on urban landscapes, and the challenges and perspectives of individuals affected by these changes, using the evolving landscape of downtown Los Angeles as a prime example.
