Have been doing some thinking recently about why people pay the rents that they do.
More specifically, I’m interested in understanding why someone would happily pay $2,000 for a 1 bed in Silver Lake, but refuse to pay $1,500 for the same apartment in, say, Mid City.
Obviously, there are a bunch of “hard” factors, like proximity to relevant retail and jobs, safety, cleanliness, etc.
But I want to focus here on a “soft” factor: Personal branding.
When you meet someone new in LA, he’s pretty quickly going to get around to asking you two questions:
- What do you do?
- Where do you live?
Both of these questions are really part of an attempt to determine your socio-economic status, eg where you fit in in the world.
The answer to the first question is not easily controllable… you do what you do for a living for all sorts of reasons dating back to your education, etc.
But the second one is controllable and the answer to it matters in how people perceive you. If you say “Mid City”, the person interviewing you is going to say “where’s that?”, and then you are going to have to explain and he’s going to think it’s weird that you live in an area of which he’s never heard.
If, on the other hand, your answer is “Silver Lake”, he’s going to assume you have a bit of money but appreciate creativity and a little superficial grunge.
That personal branding goes a long way towards explaining why people pay a premium to live in a cool neighborhood.