New Building Codes in the City of Los Angeles, What does it Mean?

After much discussion between the public and the City Council, more restrictive single family building codes are coming in March.  It includes a variety of regulations but here are some of the big ones (related to homes in the flats):

• Interior living space can only be built up to 45% of the lot size. Up until March 2015, it was possible to build up to 60% of the lot size.
• Areas where the ceilings are higher than 14 feet will count as double the square footage.
• If the garage is attached, the homeowner is still required to have two covered parking spots (200 square feet per car), but 200 square feet of the garage counts towards the total interior living square footage.

This came from emotional anti- McMansion sentiment from some local residences known as NIMBYs (Not in my Backyard) who are against the building of larger homes.  Generally, the residents are upset with the big box modern style of home being built and how those homes are not consistent with the more traditional styles originally built in the 1920’s.  However, nowhere in the new building codes does it restrict style including modern unless the neighborhood is one of the few Historical Preservation Overlay Zones.  This means that any style and any color can still be built, just on a smaller scale.

So what does this mean for home values?  For the smaller, older homes, that haven’t been touched in decades, it means bad news.  It means their land value will go down.  Although time will tell, it is most likely drop the value anywhere between 20% or more.  That number comes from the loss of buildable square footage and/or   floor plan functionality.  So for that old home that was once worth $1,300,000 is now worth in the ballpark of $1,000,000 or less.  An example may be helpful. Take a typical city lot of 6250 square feet.  Right now you could build living space of 3125 sq. ft. and the exterior would tape out around 3300 square feet. Going forward the house would only be 2,612 square feet and only 2,500 square feet if the foyer is vaulted. 2500 square feet is smaller than what most buyers want today. The size can be slightly increased if the garage is detached, however that requires a long driveway, a much more narrow house, and more expense passed on to consumers.

Either way, I will be looking at values and will keep you posted as more develops.