Big Homes/Small Lots (SLO): The Answer to Single Family Home Affordability in Los Angeles
You may have read one of my most popular articles, Let’s Breakdown the Basic Cost of Building a Home in Los Angeles, where I discuss the true cost of building homes. With that said, the City, State, and even at the Federal level have discussed ways to increase housing supply at a more affordable price.
And for many of you who want to buy a brand-new home in more central locations, your options are limited. Because, although many are working from home for now, it may change back for some companies and as a buyer, that is something to think about.
One solution is building multiple homes on a newly subdivided piece of land. That is possible under the City of Los Angeles; ever popular Small Lot Ordinance (SLO). Because the cost of land is the main price driver, an SLO is an alternative to building at a more affordable price. For example, if a plot of land costs $1,650,000 and you can build five homes, that is like paying $330,000 per lot. You cannot find flat land at that price anywhere in the metro Los Angeles area.
Under the SLO, a developer buys the land typically zoned R1.5, which allows for subdivision. The odds of splitting a single-family lot (R1 zoning) is slim because it would require zoning and neighbor approvals, which is where the NIMBYs (Not in My Backyards) would shut it down. Then the developer goes through the process to build, say, five SLO homes. Now, these are not your typical homes. You have the full benefits of a single-family home, except for a traditional backyard. In this case most have private rooftop decks, balconies, and private attached garages. This means you could have amazing views and amenities at a more affordable price. All the homes would share a driveway, and there may be some common areas. Because of this, many have a modest maintenance fee, where the owners decide how to manage their community. This is similar to PUD (Planned Urban Development). The advantages to an SLO over a townhome are that with an SLO you own the land under your home, you have no shared walls, and do not have the rules of a townhome homeowner’s association.
Now the big question, what would some of these homes cost? Well, of course the answer is, it depends. If you are looking in the San Fernando Valley, it might range somewhere as low as in the $700,000 range. But on the Westside, you can buy one of these homes for $1,000,000-$2,000,000 with sizes ranging from 1,500-3,000 sq. ft. Now, although this might seem pricey, when compared to traditional brand-new construction homes in similar neighborhoods on their own, it could literally go for as much as double the price.
Now, as an example (and borderline shameless plug), take one of the latest developments listed by LAMERICA Real Estate in Mid-City Heights known as Redondo Five (https://redondofive.com/). They are well-located at the corner of Redondo Boulevard and 21st Street, which buyers want as it gives them the opportunity to move about the City without the condo feel with neighbors above or below you. In this case, there are five different models, each with their own specifications and thus, price points. However, the homes start at $1,085,000 and go as high as $1,585,000 for the largest of the homes.
As someone who may be looking to buy their first home, this could be a great choice. It is the compromise without the sacrifice of buying a fixer for the same price, and the builder provides you with a 10-year structural warranty.
For now, anyways, this is where affordable housing is going outside of condos and apartments. Because of the increase regulation and the rise of construction costs, if you do want a brand-new home, this is the way to go.
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