California Dreamin’ : Meet the Equity Emigres, L.A. Homeowners Who Are Cashing In and Bailing Out; Only They’re Finding Paradise Has Its Thorns, Too

You hear it all over Los Angeles. It’s a perennial topic at dinner parties, while waiting for the Versateller, in muted conversations in elevators and bars: Housing prices are increasing so fast, they can’t possibly be real!

And when the neighborhood disgrace--the dumpy little corner cottage with the sagging roof and crooked fence--sells for $300,000, all the neighbors are so astonished they stand on the sidewalk in hushed groups, look back at their own houses with unnaturally bright eyes and make plans to leave Los Angeles.

The good news for Los Angeles property owners is that--thanks to equity appreciation--they now have the means to fulfill their fantasies.

Since 1986, the median price of housing in Los Angeles County has increased 40%, according to the California Assn. of Realtors. For some houses in the $200,000-to-$400,000 range, prices rose 40% in the last year alone. These are “unprecedented windfalls,� says Tony Contratto, a Manhattan Beach tax lawyer. “People become millionaires by virtue of owning property in Los Angeles.�

Even when they don’t actually become rich, they at least have options that ordinary people with ordinary incomes never dreamed of having.

Bigger and Better Homes

After as little as three or four years of owning a home in Los Angeles, people can sell their houses and use the profits to buy bigger and better houses--often with no mortgages--in cleaner and quieter parts of the country where children can play outside without danger of crime, traffic, smog and itinerant malcontents.

“A guy at the end of the street put up a little handwritten sign,� says Kathryn Rowley, a lawyer who lives in Silver Lake. “We thought he was trying to sell a lawn mower. He sold his house in three hours, picked up his new baby and went back to New Jersey.�

Jim Sawyer, a Santa Monica businessman who decided his hometown was no longer a place to raise children, sold his home on a busy street adjacent to a commercial lot for $400,000. He moved to Asheville, N.C., where he bought a four-bedroom, three-bath, trilevel on a one-acre wooded lot for $145,000.

In 18 years, lawyer George Caton saw his two-bedroom-and-a-den stucco home near Century City appreciate 1,200%. Since he had had it, he says, with crime and the inability of people here to form “quality friendships,� he bought a 6,000-square-foot home last year in a quiet, tree-lined residential area of Spokane, Wash., for $120,000. “And my house,� he says, “is one of the smaller houses on the street.�

Although about half the residents of Los Angeles, according to a recent Times poll, say they have considered leaving the city in the last year, relatively few will go ahead and do it. Despite the crime, traffic and growing sense that the city is slipping downhill, for most people, the money to be made here and the career and life-style options are just too enticing.

Besides, says USC urban planner Dowell Myers, most people talk about quality of life here the way they talk about the weather: Just because they have strong opinions on it doesn’t mean they are planning to leave. For most people, it’s consolation enough to know that when push comes to shove they have options.

“Even if you don’t go,� UCLA family psychologist Irene Goldenberg says, “the sense of freedom is wonderful.�

But for those determined to get out, the opportunities can be stunning. Peter Parnegg, a former Los Angeles musician, traded in a two-bedroom 1,500-square-foot house in Studio City for a four-bedroom, 4,000-square-foot house on an acre lot with a swimming pool in Albuquerque, N.M. “You can increase your standard of living right out of the gate,� he says.

Housing prices--with the exception of cities like Boston, New York and San Francisco--are usually one-half to one-third of what they are in Los Angeles. Car insurance is 50% to 75% less. Restaurant prices are dramatically cheaper. In Asheville, N.C., says Sawyer, the former Santa Monica businessman, “you can buy a ticket to a first-run movie for $1.50.�

More important, compared to Los Angeles, the air is cleaner, the pace less harried, the traffic unbelievably light. There’s an exhilarating sense of freedom and space. Supermarkets are less crowded. The sky is darker at night. Instead of having to leave an hour early to meet someone for lunch across town, you can get there in 10 minutes. No one panhandles you. There are parking spaces in front of the library.

Jill Hearing, a Garden Grove resident who moved to Seattle, still can’t believe how lush and green everything is there. “The air is cleaner,� she says. “You can smell the green trees. There are ducks on the lakes. The sky is really blue.�

For many people, small-town life takes them back in time to the innocence of the ‘50s.

When Caton, the lawyer, bought his house in Spokane, he suddenly found himself in the midst of a 19th-Century, New England-style white Christmas. “Every house,� he says, “had a candle in every window,� and the neighbors walked around singing Christmas carols. “It was like a Currier & Ives painting.�

For other people, the best thing about leaving Los Angeles is the sense of spaciousness they now have. In Irvine, Don Smeller, a civil engineer, lived in a tract house right against his neighbor’s lot line. “All our windows,� he says, “faced a blank wall.�

But after selling his Irvine house for $207,000, he bought a $157,000 house on a hillside in an apple-growing region 150 miles east of Seattle where he now has “enormous picture-window� views of the mountains, the Columbia River, the town of Wenatchee and the mainstay of the local economy--endless orchards. His nearest neighbor is a quarter-mile down the road, he says, and the main road is so far away his two sons ride their motorcycles to pick up the mail.

As to what drives homeowners to cash in and bail out of Los Angeles, it isn’t just the opportunity to live in a bigger house. If that was all there was to it, they would have stayed here. Instead, many people say, it was the city itself that drove them out with its crime, stupefying traffic, smog, stress and those important but hard to quantify items lumped together under the category, “quality of life.�

“It was all so homogeneous,� Smeller says of his former life in Irvine. “All us 40-year-old parents with our 2.1 kids. I missed having grandmas around. I didn’t know any poor people.�

Materialism was so rampant that people were driving themselves crazy trying to cover big mortgages and carve out high life styles. “I know people trying to support $1,500 and $2,000 (monthly) mortgages,� he says. “They just worked and worked and worked and worked.�

Some expatriates cite earthquakes as the cause of their leaving. “I have a 2 1/2-year-old,� says Parnegg, who is now an Albuquerque real estate agent. “I began thinking if you were 6 or 8 miles apart during a terrible earthquake, the whole freeway system shuts down and you can’t get to your children for a couple of days.�

Larry Ruccione, an irate Silver Lake resident who worked in brokerage management in Century City, says one reason he quit his job and made plans to move to Puget Sound was crime: “Every house on my street has been broken into. My brother has been robbed twice and mugged once.�

Jill Hearing says her Garden Grove home was robbed twice: “I never met such brazen criminals. We couldn’t leave the (front door unlocked). They would cut through the screen door and walk right into my house.�

Once, while she was out shopping, someone snatched her purse. At the shopping mall where she worked, “they were losing 12 cars a day� to thieves. Finally, when her husband’s oil company began checking his blood for possible industrial toxins, she threw in the towel: “I was getting frightened for our lives. I said, ‘Gee, we lived here all my life and they’ve finally chased me out.’ �

Another thing most equity emigres cite as a reason for leaving Los Angeles is the frustration of dealing with traffic in an increasingly frantic and gridlocked city. “I swear I spent half my life at red lights,� Smeller says.

Ruccione complained that three years ago he could commute from his Silver Lake home to his Century City office in 20 to 22 minutes. Now, he says, even at 5:30 a.m., it takes him 40 minutes. Anytime after 3:30 p.m., his return drive took 75 minutes, by which time he was so stressed out, he says, it took him two hours more to unwind.

Ruccione says he was making great money: $140,000 a year himself, with his wife bringing in $50,000 more. But one-third of that sum went to taxes; 25% more subsidized his business. Everything was expensive. Even a cheap Century City lunch, he noted, cost $12.

“I was lucky if I had $35,000 left to live on,� he says. “I’d have been better off flipping hamburgers.�

By the time he hit 40, he also began to suffer an upset stomach and headaches. So he quit his job in December, put his house up for sale and began preparing for his move to Puget Sound. “That was Dec. 31,� Ruccione says. “I haven’t had a headache since.�

In comparison with Los Angeles, not all small-town life is paradise. Housing costs and insurance rates may be lower, Smeller says, but retail stores like K mart still charge the same prices. And anytime you need an out-of-the-ordinary item, it has to be brought in by special order. “If your car is laid up in Orange County, no problem,� Smeller says. “Someone would have a part just down the block. Here (in Wenatchee, Wash.) they call around and call around and finally locate a part in Reno. Then there’s a snowstorm in the mountains and who knows when the truck will get in.�

Many people who leave Los Angeles find they miss its sunshine. Marion Kaire, a former Los Angeles restaurateur who traded her $140,000 home in Sylmar for a $50,000 home in the pine forests of the central Oregon coast, says that the air is “sparkling clean� but it’s also so cold and rainy there that “a lot of people come up here, stay for two years and then go someplace else.�

Crime in Los Angeles has always seemed worse than it is because with the city’s huge population there’s always someone somewhere pulling off a no-brainer. But even in smaller Portland, Ore., emigre Crips and Bloods now stage drive-by shootings on green tree-lined streets.

And while some Los Angeles residents initially move out to flee the city’s fast-paced life, they then discover to their chagrin that they miss the city’s dynamism and drive.

“L.A. lives, eats and breathes on change,� says Parnegg, the Albuquerque real estate agent. “We had a real rough time adjusting. We missed the action. There is not that sense of infinite economic hope that you have in L.A.--although you might not have gotten your screenplay or book deal signed this week, the possibility exists that it can happen any time.�

Even the more sophisticated towns seem provincial in comparison to Los Angeles, some say. “Seattle is a closed society,� Ruccione says. “If you want to make it there, you better have a connection to the University of Washington.�

Further, big-city sophistication, far from always giving newcomers an edge, sometimes works against them in small towns.

“You have to adjust yourself to a more sedate pace,� Ruccione says. “Things up there happen on their time table, not yours, and if you push too hard, you turn people off.�

Jill Hearing says she lived in Washington six months before her neighbors would talk to her: “I didn’t know when I first moved up here that Californians were the hated enemy. Just mention the name California and the hair goes up. In California, we always had more of an open mind. People accepted you as long as you were honorable or hard-working. Here (the attitude is), ‘If my aunt doesn’t know you and want to give you a good recommendation, we don’t want to know you.’ �

Because of stagnant housing markets in other parts of the country, where even a comfortable well-built house on a friendly tree-lined street can go begging for a buyer for as long as a year, people who leave Los Angeles for quieter, less frenetic places sometimes find that the way out of town is a one-way street. In the time they were gone, prices have gone up so fast they now can’t qualify to buy the house they once lived in.

(Although Los Angeles homeowners can make big profits when selling their houses, unless they are 55 or older and thus eligible for a one-time deferment of the first $125,000 in capital gains, they must pay up to a third of their net gain in taxes. The only way around the IRS rule is to buy a house as expensive as the one you sold. The problem with that is that you end with the same size mortgage at a higher interest rate in a part of the country where wages are lower.)

Because the economy in Los Angeles is so strong, many people make the mistake of projecting that vitality on the rest of the country. In fact, in many small towns, it can be a terrible problem finding a job.

Smeller, who is looking for engineering work in central Washington, observes: “You don’t see ads for professional people in the newspaper in Wenatchee. There’s a good ol’ boy network. You get your job because you know somebody.�

Despite 20 years of experience as a pipe fitter and a good work record, it took Hearing’s husband almost a year to find work in Seattle. And when he did, it was a two-hour commute by bus and ferryboat from their Bellevue home. He had to leave at 4:30 a.m. and often didn’t get back till 7 p.m., assuming there were no accidents on the bridge or traffic jams on the narrow two-lane roads.

Many prices are higher in the Seattle area. Hearing pays 79 cents a pound for bananas, twice what she did in Garden Grove. And to heat her house with electricity costs $50 a week, she says, though she keeps the thermostat at a brisk 60 degrees and turns off the heat at night.

If she and her husband had it do over, Hearing says, “I would not, knowing what I know now, come up here.�

And lots of people who need jobs, she says, apparently feel the same way. When she tells people she is from Los Angeles, “People say, ‘Why did you ever leave California?’ Everyone wants to go there.�

LIFE HERE . . . AND ELSEWHERE Item: Cost to insure a 1987 Subaru and a 1988 Honda in the Mt. Washington area Los Angeles: $2,550 Elsewhere: $1,017 in western Pennsylvania Item: Time to drive across town at midday Los Angeles: 1 hour Elsewhere: 10 minutes in Eugene, Ore. Item: Cost of off-street downtown parking for 15 minutes Los Angeles: 75 cents Elsewhere: 25 cents in Spokane, Wash. Item: Cost of a pound of bananas Los Angeles: 39 cents Elsewhere: 79 cents in Seattle, Wash. Item: Average January temperature in the 1980s Los Angeles: 60.2 Elsewhere: 14.0 in St. Paul, Minn. Item: Median cost of a house Los Angeles: $190,900 Elsewhere: $64,800 in Portland, Ore. Item: Cost to register a 1987 Subaru wagon Los Angeles: $250 Elsewhere: $24 in western Pennsylvania Item: Cost of ticket for first run movie Los Angeles: $6 Elsewhere: $1.50 in Asheville, N.C.