Cranes dot the skyline in downtown Los Angeles as upscale hotels, hip restaurants and apartments signal a new wave of revitalization.
But if new arrivals want to become homeowners, tough luck. Surging demand, combined with a lull in condo construction, has created a shortage that is shutting out many buyers.
Just 10 newly constructed condos are on sale now. The 114 previously owned condos that were on the market in May is 5% fewer than a year ago, but less than half of what buyers had to choose from in 2010, according to real estate firm Redfin.
"It's amazing that the second-largest city in America has virtually no new condos in the downtown area," said Alan Mark of the Mark Co., a real estate consulting and research firm.
The shortage is driving prices higher and turning home shopping into a maddening experience. The median list price for resale condos reached $622,100 in May — compared with $369,000 in 2010, according to Redfin.
"It's a brutal competition out there," said James Bourgault, who recently won a bidding war by offering $18,000 over the asking price for a new arts district loft.
Real estate agents like Kerry Marsico are tracking down absentee owners who don't live in their condos and urging them to sell. And buyers, he said, are settling for homes they normally would shun — units without parking, for instance, or in buildings entangled in litigation.
"People are willing to overlook that," Marsico said.
The growing demand has lured at least one major developer. Greenland USA plans to start construction next week on a 308-unit condo tower near Staples Center, one piece of its massive Metropolis project. But the tower isn't scheduled to open until July 2016 at the earliest, according to the company's chief executive, Ifei Chang.
Most developers, burned by the last boom-and-bust cycle, are still sitting on the sidelines. Condo construction all but stopped after last decade's housing crash, and projects once pitched as condos became rentals. Now, most new developments are rentals rather than condos.
Nearly 1,600 downtown apartments are scheduled to open by the end of the year, said Enrique Wong, regional manager of commercial real estate brokerage Marcus and Millichap's downtown office. An additional 1,361 units are scheduled to become available in 2015.
Developers say younger adults, many saddled with student debt and delaying marriage, are likely to remain renters for the foreseeable future. Others who expect to change jobs or careers prefer the flexibility of renting.
Developers see a different kind of flexibility in building apartments over condos, said Richard Green, director of USC's Lusk Center for Real Estate.
"If you open your doors to a bad market, you drop your rents and get your apartments occupied," Green said. "If you are developing condos, you don't know whether there will be buyers around."
With so little new construction, once-struggling condo projects are rebounding. When developer AEG opened its luxury Ritz-Carlton Residences at L.A. Live in 2011, downtown's most extravagant condo development remained mostly empty amid a hangover from the economic collapse.
But last month, the luxury project sold out its 224 condos when a Chinese buyer paid more than $4 million for a penthouse, AEG said. Sales surged in 2013, and the final six units sold this year, according to the Agency, the brokerage firm handling sales for AEG.
"The fact that it actually sold out — it's huge," said Elizabeth Lande, international estate broker with Engel & Volkers. "It says there are people who could afford to live anywhere, and they are choosing to live downtown."
At the moment, there are only two options for those looking for a new condo downtown. As of Monday, there were two multimillion-dollar penthouses at the EVO, where the Mark Co. previously handled marketing and sales.
The remaining eight units are in the final phase of Barker Block, a former furniture warehouse in the arts district near the Los Angeles River. The lofts are priced between $550,000 and $615,000.
Older condos are also in short supply. If previously owned condos continue to sell at their current pace, the available homes would sell out in 2.4 months, according to the Mark Co. A six-month supply is considered a balanced market, in which neither sellers nor buyers have the advantage.
One potential new condo source could come from conversions of units that became rentals after the bust. But with downtown rents nearing $2,000 on average, according to REIS Inc., landlords don't have much of an incentive to flip their units for sale, experts said.
"If you ask most investors, they are still anticipating rent growth anywhere from 2% to 5%" over the next 12 months, Wong said.
Meanwhile, new condos are going fast.
Bourgault, the recent condo buyer, said he and his fiancee placed bids on four Barker Block lofts, knowing competition would be fierce. They were asked to counter their original bids, which were already over the asking prices.
This spring, the young couple won a bidding war, buying their first home — an 800-square-foot loft for $472,000.
Bourgault zeroed in on Barker Block because, he said, "there was really nothing else."