The recession, and in particular the real estate crisis , has created a culture of haves and have-nots in Los Angeles that will cause further havoc on the economy unless it is corrected by other means.

In The New York Times article “The Jobless Rate for People Like You,” it was reported that the unemployment rate for all men and women with a bachelors degree or higher was 4.5%.  California is home to one of the largest populations in the country without a high school diploma, according to the U.S. Census Bureau.  While it does not apply data specifically to Los Angeles , it is sufficient to say that while the unemployment rate in California is 12.3%, it may be considerably higher in LA.  California received a peak number of stimulus jobs at 110,185.  It remains to be seen if the artificial stimulus will sustain California until the recession rights itself.

The high unemployment rate in Los Angeles has no doubt created a domino effect, contributing to the 11.7% foreclosure rate in the state of California, which in turn led to the failure of 17 banks in 2009.  CNNMoney predicted that home values would fall nearly 25% in 2009 in Los Angeles-Long Beach-Glendale area, the biggest drop in the country.   Currently, Trulia lists 6,230 homes for sale and11,192 foreclosures in the city of Los Angeles.  The most popular neighborhoods are Hollywood Hills, Bel Air, Silver Lake, Brentwood and Los Angeles.  Just as the unemployment rate does not ring true for people of every education background, so the neighborhoods in Los Angeles are not all equal when it comes to the ability to sell a home.

What’s most disturbing about the current real estate trend is that the worst of it has yet to be seen.  Option arm mortgages were leant to the desperate, and as many as 88% of option arm mortgages have yet to recast and reach their balloon payment.

However, on a more upbeat note in 2009 the Housing Opportunity Index was at 70%, the highest it’s been ever in the history of the HOI (which was begun in 1991).  So while the economy has further to sink, we shall recover strongly and be the wiser for our experiences.  While manufacturing jobs are of the past, and the housing market may never recover to the point it was at before we entered the recession, information-based and creative positions will take their place.  The workforce will need to be educated to meet the demands of the new economy, and predatory lending should be sharply curtailed in all future endeavors. 

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Lisa Brown is a Sales and Marketing Associate for Almost Home USA (Corporate Housing Los Angeles), a corporate housing company whose goal is to provide such excellent experiences that clients feel almost home.

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