Saturday, July 22, 2017

Real estate cycles and "gentrification." What they are and what they aren't - Mary Cummins, real estate Los Angeles

gentrification, real estate cycles, los angeles, california, mary cummins, real estate appraiser, 
Steve Lopez of the LA Times wrote an article today about the caliente hot topic of "gentrification." His article is titled "Protesting a coffee house over gentrification fears is silly - and misses the point of L.A." While I don't always agree with Lopez I do agree with him on this issue.

Lopez' article is in reaction to another article by Ruben Vives from last week. That article is "A community in flux: will Boyle Heights be ruined by one coffee shop?" Here is a quote from a gentrification activist protesting the coffee shop, “Don’t contribute to the displacement of the people in the community right here in Boyle Heights. Our rents are going up because of the art galleries. Please do not cross the picket line!”

If you can believe it there are now "gentrification activists" who go around protesting and attacking new businesses in their neighborhood. They stupidly believe the new businesses are causing their rent to go up. Things could not be further from the truth. The true relationship is the inverse.

The word "gentrification" is causing some uninformed violent racists to start attacking new businesses that open up in shuttered store fronts in run down parts of their neighborhood. The definition of "gentrification" is "the process of renovating and improving a house or district so that it conforms to middle-class taste.” Gentrification is fixing up a run down home in a run down neighborhood. In the world of real estate this is called "revitalization" or "rehabilitation." Below are the four basic real estate cycles.

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 ;-)
Here's an article I wrote about this on Facebook.

These violent uninformed "activists" think if they put a new coffee shop out of business via harassment and threats of violence their rents won't rise. Wrong! Their rents will still rise and they'll probably be arrested.

The force behind their rents rising is revitalization of the area and buildings. Some parts of LA are very expensive to live right now. Rent is $3,000 a month for an apartment. These people would like to rent or even own something more affordable. For this reason they are spreading outside of the more expensive areas to more affordable areas such as Eagle Rock, Boyle Heights and Glassel Park.

Leonardo Vilchis director of Union de Vecinos stated about the coffee house "It's a threat to local businesses and it's one more sign of gentrification that we need to defeat otherwise this neighborhood is going to end up just like Highland Park." Oh no, Highland Park! I hear they even have a Starbucks ;-)

Leonardo Vilchis here wants the neighborhood to stay run down with lots of retail vacancies, high crime, homeless sleeping on the street, graffiti on every property, over grown lawns, trash dumped on the streets and hypodermic needles in the few parks. Vilchis is against grocery stores like Ralphs opening back up in these areas because coffee shops may soon follow. Ralphs and other big stores left these run down area years ago because of crime and blight.

These "gentrification activists" state that they will lose their culture if they can't afford the rent in the neighborhood. They state it's an attack on their culture. Gentrification has nothing to do with culture. First of all which culture are we talking about here? There are many cultures here already. The activists think the new people want to destroy the Hispanic culture. That won't be happening as most in LA are Hispanic. Are they going to throw their culture out the window? I'm not.

Another thing Boyle Heights wasn't always Hispanic. There were Asians, Armenians, Jews, name a few. And before Boyle Heights was Boyle Heights it was part of Mexico. Before that it belonged to native American Indians. What about their cultures? The Americans killed most of the Indians, most of the rest died of diseases we gave to them and the remaining few were displaced onto reservations. No one is talking about doing that to people in Boyle Heights today yet the activists are acting as if they were.

Why does Vilchis want the neighborhood to remain a dilapidated dump? Because he wants cheap rent for himself and his friends. Only the tenants have a problem with this revitalization. The property owners are happily selling their properties for great profit. Some aren't selling but they're enjoying the new stores and improvements. Vilchis says this is all caused by "greedy" developers. Maybe Vilchis should attack and threaten the property owners selling their land for big "greedy" profit. It'd make just as much sense.

If these activists want cheap rent, they need to take different actions. As the art district went luxury lofts the real artists left for cheaper run down lofts in Santa Ana and Long Beach. Cheap rent is just a move away. These areas are cheap because they are still dilapidated with no coffee shops or big chain grocery stores. If you want super cheap rent, move to the slums of Detroit. Of course you'll have no work or stores.

I do agree we have a problem  with lack of affordable rental units for poorer people in LA. I've written many articles about this. Part of the cause  is lack of units. Because LA land is so expensive now developers are only building luxury apartments. We need type B, C buildings in more affordable parts of LA away from the core but near public transportation. We need the city and anti-development lobbyists to work with developers to build the units the city needs. Instead anti-development lobbyist NIMBYs fight ever building permit and development. It must be profitable for the developer or they won't do it. Attacking the developers also doesn't solve the problem. It just makes developers never want to build in affordable areas if they will be attacked and I don't blame them.

Revitalization throughout Los Angeles can't be stopped by a band of criminal vandals. Revitalization should not be stopped. It's good for people and the city as a whole.

Before people start attacking me I'm part Mexican. I'm also not a developer, builder, flipper or coffee shop owner. I'm just a real estate appraiser who watches and comments on the real estate market as it happens.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, real estate, appraiser, appraisal, instructor, teacher, Los Angeles, Santa Monica, Beverly Hills, Pasadena, Brentwood, Bel Air, California, licensed, permitted, single family, condo, pud, hud, fannie mae, freddie mac, uspap, certified, residential, certified resident, apartment building, multi-family, commercial, industrial, expert witness, civil, criminal, orea, dre, insurance, bonded, experienced, bilingual, spanish, english, form, 1004, 2055, land, raw, acreage, vacant, insurance, cost, income approach, market analysis, comparative, theory, appraisal theory, cost approach, sales, matched pairs, plot, plat, map, diagram, photo, photographs, photography, rear, front, street, subject, comparable, sold, listed, active, pending, expired, cancelled, listing, mls, multiple listing service, claw, themls,

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