Home Sweet Apartment

This weekend, the Los Angeles Times provided a nice, personal take on what's going to be a big story as the local economy slowly emerges from the recession. Single-family homes are out. New apartment complexes are in.

The Times caught up with Jerry Epstein, the "last surviving original developer of Marina del Rey," who donned a very Old School seersucker jacket and hard hat to break ground on the new Shores development there. You really couldn't frame up this trend any better: like skinny suits and ties from the swinging Mad Men era, apartment living is coming back to L.A. Break out the cocktail shaker and sign a lease on a place with a view of the Pacific!

It's not hard to see why this is going down: Southern California was one of the regions that took the full brunt of the housing crisis. We had it all, from overbuilding in the Inland Empire to seriously unethical subprime entrepreneurship in the form of Countrywide Financial in Calabasas. Now owning is out and renting is in.

Renting is great, except when it isn't

You can ponder the economics of that, as have respected econo-bloggers like Felix Salmon of Reuters and Megan McArdle of the Atlantic. You can even question the whole "a home is a great investment" argument, as Wall Street gadfly James Altucher did right in the teeth of the downturn in 2009.

But it's useful to get away from the numbers and consider what renting vs. owning, at its core, means for the So Cal economy: people leaving the state.

Goodbye to all that

Renting has one financial advantage over owning: When times get tough, you can always pick up and go. The property, declining in value, is the landlord's problem. So here's what will happen in California as apartments displace houses as the preferred type of dwelling, possibly for a decade or more: We'll lose a generation of settled-in taxpayers. In exchange we'll get a steady flow of itinerant consumers who like sunshine and palm trees.

Labor mobility sounds great, except when your region has shed more than a million jobs and is facing budget crises at both the state and city levels. What Southern California really needs isn't a massive new apartment complex on L.A.'s Westside -- it needs mortgage reform. The region is counting on people who can't or don't want to buy staying put. But without jobs, that's going to be a tall order.