Live/Work Changes Headed to Council
Eric Richardson
[Flickr]
A kitchen inside the Rowan Lofts, which developer Downtown Properties hopes will soon be eligible for FHA insured loans.
DOWNTOWN LOS ANGELES — A change in the definition of live/work units that is designed to enable buyers to access cheaper loans goes to City Council next week, and its passage could offer a boost for Downtown's condo market.
Supporters say that redefining live/work as primarily residential will bring the ordinance more in line with how the units are actually being used, and will promote home ownership by allowing buyers to access highly-attractive federally insured loans.
At an August planning committee hearing, concerns were raised that the change would create a problem for artists, who use the live/work units for more of their original purpose. The Planning department attempted to address these concerns in the final ordinance, adding language that allows the Zoning Administrator to alter the live/work percentages on a project "to accommodate the requirements of artists and artisans." That change would be administrative, not a variance.
Existing developments would need to apply for re-classification if they wanted to take advantage of the new rules.
Tightness in the lending market has made it much harder for individuals to purchase Downtown units. Where condo buyers were previously expected to put only three or four percent down, private loans today typically require 10 - 20% down payments.
"If you're buying a unit for $300,000, kind of our lowest-priced one bedroom unit, you've got to come up with $60,000 down, plus closing costs and everything else," Bill Stephenson of Downtown Properties explained to blogdowntown after City Planning Commission approved the item in July. "All of a sudden you need roughly $70,000, then you've got to move in, so you probably need roughly $80,000 in cash."
In contrast, FHA insured loans allow just a 3% down payment on loans up to $625,000. That means just $10,000 cash, a much more accessible sum. But because live/work units were considered by the government to be commercial, they were ineligible.
The motion goes to Council on Tuesday, December 15.
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bromike666 on December 12, 2009, at 09:34AM – #1
Way to go City Council, lets make it easier for people to buy things they can't afford. Better yet, us taxpayers can pick up the bill when they default. Didn't this thinking get us into the mess we're in. More of the same is not going to get us out. Quit trying to prop up stupid developers under the guise of "making homes affordable."
If you don't have the $$$ to make a 20% down payment there's one of two things going on. 1. You can't afford the property. 2. The property is overpriced and no one can afford the property.
Wes on December 13, 2009, at 07:32AM – #2
Exactly what he said... Retweet
David on December 13, 2009, at 05:50PM – #3
Wow - you are complaining that the City is changing the definition of live/work to reflect how the units are actually used. Instead of complaining about what the City should have done when they first came-up with the live/work definition, go to the FHA and complain that their down payment requirement is too low.
Damien Goodmon on December 13, 2009, at 05:51PM – #4
If you don't have $80K in cash you probably shouldn't be buying a $625K property.
Ankur on December 14, 2009, at 10:42AM – #5
@damien
20% of 625k = 125k
sunny on December 18, 2009, at 12:04PM – #6
Another fact to know about FHA financing is that for a loft complex to qualify for it, the entire complex has to be at least 50% occupied. Do many downtown loft units meet this criteria?
Ted Trent on January 08, 2010, at 10:21PM – #7
All the lofts that are for sale are ALL at least 50% occupied. I'd say 95% of them are at least 100% occupied.
Ted Trent on January 08, 2010, at 10:27PM – #8
Regarding comments about what people should and shouldn't be doing with the opportunity to purchase a home. The reality is that FHA is providing people exactly the same opportunities. They are able to purchase 95% of the properties in Los Angeles that meet their price qualifications. The 5% they are not allowed to purchase is DOWNTOWN. We are only making it so that Downtown is on the same playing ground as the REST of Los Angeles. Downtown is the BEST place to live in Los Angeles. You'd know that if you lived here. I know. I've lived here 12 years.