moving toward urban spaces. To an extent, this is a newer phenomenon among certain segments of the population. Everyone is trying their hardest to satisfy the needs of a population that’s growing and a population that has expressed a desire to live in urban en- vironments. That is all working together to create this new system of supply and demand in Southern California that hasn’t been there, at least to this degree, before. LBBJ: Is there anything else you’d like to add or stress? Krueger: I think what is important in any living environment is to create a sense of home. I personally think that some of the amenities that are often featured, especially in the apartment sector, like exercise rooms and other things, actually may not be the deciding factor for homebuyers. The deciding factor is connectivity – and more and more people are realizing that urban settings are ideal living environments for connectivity to ameni- ties, transit and community centers. Paul Shapiro President, Paul Shapiro Research LBBJ: What are the most important factors to homebuyers when choos- ing where they want to live? How important is the concept of connectivity to the community? Shapiro: There are a lot of factors that go into home-buying decisions, and it depends who the buyer profile is. . . . Schools, for instance, could be a really critical thing for some groups as opposed to other groups. So a con- sumer may choose a certain location because of the preferential schools that the site provides. The offset to that would be price. There’s an old ex- pression in my business: housing is a perfect ring of substitutionality de- pendent on price. So price drives a lot of the issues – the whole dollar price and then, from my perspective, the relative value to where you’re building because in my opinion all markets are local. . . . There are 88 cities in Los Angeles County and every single city is somewhat different – it has a dif- ferent profile of buyer, age, ethnicity, product type. . . . One of the things that comes up . . . is walkability or connectivity . . . Can you get to retail? Is it walkable? Are there recreational ameni- ties? Is there shopping close by? How close are the schools? Is there easy access to freeways? Ultimately, when you have none of those things, a big driving force is clearly price. So what’s happening now is prices have moved up pretty demonstrably over the last few years, as interest rates dropped. The real question becomes, what is the affordability level within the context of the particular market. LBBJ: How are these preferences impacting where homebuyers are choosing to live? Shapiro: For instance, the San Gabriel Valley [is] heavily dominated by Asian buyers. Schools are very important in that market. So you see huge value differentials within a city with different school districts. . . . The offset is, in this market, there’s such a scarcity of affordable housing that price is a critical element also. And people are willing to be pioneers for price. LBBJ: Is there anything else you’d like to add? Shapiro: There are about 10.5 million people in L.A. County. It’s a very seg- mented market. In a primitive market, you get a first-time buyer, move-up buyer and a custom market. This market has many layers of segmentation across the spectrum across the county. So you have to be flexible to those things. If you go to a smaller city, it’s much more predictable. Every market has to be studied individually and the definition of what constitutes the pri- mary market is the critical aspect. . . . We have a more varied and different population in L.A. County than we had 20 or 30 years ago. It’s just a different composition of people, and it’s important to understand those differences. Peter Dennehy Senior Vice President, Meyers Research LLC LBBJ: What are the most important factors to homebuyers when choos- ing where they want to live? How impor- tant is the concept of connectivity to the community? Dennehy: I think first and foremost, it’s location in relation to, typically, employ- ment. It’s proximity to family, proximity to where they live currently or where they’d like to live, or being located where they’d like to live. . . . [and] obviously af- fordability. . . . People want convenience in their housing [and] walkability. We’re seeing it in the of- fice market as well. People don’t like to work in offices that are isolated. I think that’s true in their homes as well. It’s just more convenient to have everything nearby and easily accessible – if not by foot, then by car. I think the mixed-use environment is more appealing to buyers today because it avoids that sense of isolation. LBBJ: How are homeowners expressing those preferences? 22 22 “We have a more varied and different population in L.A. County than we had 20 or 30 years ago. It’s just a different composition of people, and it’s important to understand those differences.” Paul Shapiro, President Paul Shapiro Research Walkability is an important consideration for homebuyers. 2017_18Pages_OlsonCopy_PortAnniversary 12/22/17 11:31 AM Page 22