At Low End of Home Market, High Hurdles

The house Ada King bought for $140,000 is a plain stucco box wedged to the back of a tiny lot in Watts, with a freshly sodded front yard the size of a supermarket aisle.

King admits it isn’t much. But it’s solid, well-built -- and it’s hers.

This is where King, a niece of bluesman B.B. King, hopes to start her rise from “bad luck falling down like rain” to “I ain’t gonna worry my life anymore.”

A two-bedroom, South Gate-adjacent, needs-TLC place is about all a wage of $10.75 an hour buys these days, even with an interest-free second mortgage designed to get low-income people into home ownership.

“You figure, L.A., you’ll find some kind of decent house,” said King, 35, a single mother of two. “It’s not that way. No matter what city you go to, all the properties are still the same. It is ridiculous -- too high.”

King’s situation in Watts highlights an overlooked story in Southern California’s heated housing market: Rapidly increasing prices may thrill those who already own a place, but they have crushed the hopes of many seeking entry into the middle class.

Three decades ago, a California family earning about a quarter of the median income could afford a median-priced home. But today, a family would need to earn more than 160% of the median income to afford the same home.

With nearly three-quarters of California families unable to buy a median-priced first home, those trying to get into the market must make enormous sacrifices -- in their choice of neighborhood, the quality of their home and the budgets they have to live on.

This distortion of the housing market in California, particularly in Southern California and the Bay Area, runs counter to half a century of social policy aimed at broadening the middle class and threatens to further polarize a region already characterized by extremes of wealth and poverty.

The federal government poured more than $20 billion into the housing industry in the years after World War II, helping propel home ownership nationwide to 68% today. California lags, with only 58% of households owning their home -- the fourth-lowest rate in the nation, according to the U.S. census. Moving west is no longer moving up if housing is the measure.

That reality is starkest at the bottom of the housing market, where prices have outrun programs designed to help people get a start.

Over the past year, the Los Angeles city Housing Department has seen a 50% drop in clients who, like Ada King, sought interest-free “soft second” mortgages of $60,000 to $75,000, said Bobken Simonians, director of the department’s home ownership division. Simonians thinks he knows why: The bottom of the market in Los Angeles has risen beyond the reach of federal aid formulas.

“As prices increase, our subsidy is not enough,” Simonians said.

Under federal rules, a family can qualify for a subsidized loan if their income falls below 80% of the median family income for the area in which they live. In Los Angeles, that comes out to about $47,000, Simonians said.

“At that income level, the first mortgage a family can afford is about $120,000,” Simonians said. “Our $60,000 for purchase assistance brings it to $180,000. At that price, you cannot find many houses in Los Angeles and, if they are available, they are not in areas people like.”

There are only five ZIP codes within Los Angeles with median prices below $200,000, all of them in or adjacent to Watts. And all have experienced price increases of more than 25% in the past year, according to DataQuick Information Systems in La Jolla.

Some private aid groups are trying more aggressive approaches to bring homeownership within reach for low-income working families.

The United Way of Greater Los Angeles provides a 2-for-1 match on dollars that a low-income renter saves toward a down payment on a home. The group aims to put 5,000 people into homes or condominiums over the next five years by working with a network of housing agencies and groups.

Inglewood Neighborhood Housing Services is even more aggressive, matching down-payment dollars at 3 to 1. Both programs cap their assistance at $3,600. The programs are among many “individual development account” plans nationwide designed along the lines of 401(k) retirement plans.

Cirilo Robles, 41, and his wife, who works part time, have two children. They bought their house on 115th Street in Watts for $175,000 by putting away $300 a month in the United Way’s “Saving for the American Dream” program. Robles, who was living in Inglewood at the time, also got 3-for-1 matching funds from that city’s program, which serves the whole county.

Like Ada King, the Robleses scoured one neighborhood after another. The path to homeownership took them from View Park, where Cirilo Robles works, to Inglewood, to Compton and, finally, to Watts.

“There in Inglewood, a house like this cost $240, $250 [thousand]. We couldn’t pay that,” said Robles, speaking in Spanish. “So we came here. Over time, if God allows, we’ll be able to buy over there.”

Robles, who immigrated from Mexico and is now a citizen, loves the house they eventually found -- a pink Spanish stucco with green trim. It had new kitchen cabinets, carpeting and fresh paint. But the rest of the property was a mess, Robles said.

Renters had been living not only in the house, but in a garage, a shed and a trailer in the back yard, Robles said. He still gets mail with different names on it, former tenants he suspects were illegal immigrants who’ve moved on in search of their own dreams.

The Robleses must stay in the house at least five years or pay back the money from Inglewood, he said. After that time, the amount is forgiven. United Way has no such restriction.

While he may not be middle class yet, Robles now lives among the ranks of the house-rich and cash-poor. His $1,183 monthly mortgage payment is more than double what he used to pay in rent, taking most of his salary.

Even with help, homeownership often requires major sacrifices. To make his house payment, Robles works five days a week at a florist shop in View Park and makes deliveries for another shop on Saturdays. He takes home about $1,600 a month. His wife, Rebeca, works part time at a day-care center five days a week, where she earns $7.23 an hour with no benefits.

When school is in session, Rebeca leaves home at 7:10 a.m. in her 1990 Honda Accord, dropping the children off at school before going to work. After-school care for their older son, Alex, 14, often consists of Rebeca Robles’ parked car, outside her job, where he does his homework to fill the half-hour gap between when he’s let out of school and Rebeca Robles leaves her job. A baby-sitter watches the younger son, Eduardo, 9, for an hour until Rebeca gets home.

“She made the first payment on the house,” Robles said of his wife.

United Way officials say not all families need to make the kinds of sacrifices the Robleses have made, but they warn clients of the harsh financial reality facing those trying to bridge the gap between poverty and prosperity.

“You find you have more of a challenge, but you’re building an asset,” said Joe Haggerty, president of United Way of Greater Los Angeles. “It should lead -- if not for them, then for their children -- to the middle class.”

With steel grates instead of shutters on his windows and a white metal fence instead of wood pickets out front, Robles is confident he is on his way up.

“We’re comfortable here,” he said proudly. “ ... They say it’s a bad neighborhood, but this street is calm. We’re very content here in this house.”

But even as he showed off his little piece of the American Dream, sirens blaring nearby punctuated his sentences.

Ada King also faced daunting hurdles on the road to homeownership.

A nurse who works in a home for the aged in Gardena, King lived in public housing for a decade with her daughters, Erika, 13, and Zoe, 6. Neither father was interested in marriage or a family, King said. “You know that song, ‘The Thrill Is Gone?’ There you go,” she said.

One father is hauled to court regularly to answer charges of being a deadbeat dad and leaves with a warning to get a job. The other forfeits part of his Social Security disability check toward child care. It isn’t much, King said, but anything helps.

She hated the Carmelitos public housing project, a 713-unit low-rise in north Long Beach where she lived. Every year, she filled out the same surveys promising improvements to her surroundings. Nothing ever changed, she said.

“I said, I have to get up out of here and, if I do get out of here, I’m going to get my own place. Because if I’m going to pay anybody over $500, I’m going to be paying because it’s mine,” King said. “I’ll be making my own pockets fat.”

Just getting information about home-buying assistance programs was difficult, she said. “How I got more information was just through one lender to another lender, to another lender, to another lender, to another lender, to another lender, to the point where I got to the Los Angeles Housing Department,” King said.

King spent two years clearing up bad credit, taking courses and keeping her employment record clean. Finally, she was approved for an $87,000 home loan. The city Housing Department’s second mortgage, with no interest or payments for 30 years, brought her total available credit to $140,000 for a purchase, plus a few thousand for renovations.

She searched for a house she liked and could afford, but agents shrugged and turned her away, apparently not interested in anyone shopping under $200,000.

The houses she saw brought her to tears. “They were really in bad shape -- not medium shape, where maybe you could get in there and do some painting. I mean, really bad shape,” King said.

“Many a night I cried. Four years I cried, been disappointed.”

King took possession of the tiny house on Bandera Street on April 16, the day after her 35th birthday. Her mortgage payment is $690 a month. In public housing, she paid $575 in rent.

It’s a bargain, but she is still talking herself into the neighborhood, a block north of the Jordan Downs housing project.

“Of course, all this is new to me. But the lady next door, she said she’s been here for seven years,” King said. “She said ... the neighborhood is pretty quiet, everybody kind of sticks to themselves. The only problem is just your teenagers. Teenagers get bored. They ain’t got nothing else to do. But it’s not gang teenagers. We don’t have no gang teenagers.”

As King sits in her sweltering living room, cooled only by a small air conditioner, she wonders if she did the right thing. She says a friend at work abandoned Los Angeles entirely, buying a house in Riverside for $160,000.

“She’s got three bedrooms,” King says wistfully. “She says it’s so nice, so nice.”