Are Rich People Making L.A. Rents Worse?
The debate over Los Angeles' housing crisis has two distinct sides. Build Better L.A., an initiative represented by labor, developers and some renters, argues that if we cut red tape and make it easier to build apartments, prices will go down due to an increase in supply, and fewer people will be on the streets. The Neighborhood Integrity Initiative, represented by community activists, homeowners and some renters, argues that unchecked luxury development is what's driving up rents and homelessness.
Both factions have evidence to support their view. A new analysis of renters' incomes in big American cities, including Los Angeles, suggests that high-end dwellers could indeed be driving up rents — but that doesn't necessarily mean they're responsible for the "most unaffordable rental market" in America.
Rental service RentCafe examined recent U.S. Census Bureau data to confirm that Los Angeles is a city of haves and have-nots, with a comparatively strong number of renters at each end of the income spectrum. "Los Angeles has the third-highest number of wealthy renters in the country," says a spokeswoman for the site, Amalia Otet.
The number of households in the local rental market who earn more than $150,000 increased by 8 percent from 2014 to 2015, the RentCafe analysis found (and L.A. rents rose over that same period). The study also points out that a solid majority of L.A. renters (59.7 percent) are part of households that see less than $50,000 a year. The median household income in L.A. County is $55,870, according to the census.
Supporters of capping development say that the increase in wealthy Angelenos, coupled with the increase in rent, is proof that new condos and apartments targeted at the rich are correlated to rising rents. On the other hand, opponents say that if more units were built (even high-priced ones), then both the wealthy and the rest of L.A. would face less competition when renting — and that would lead to lower rents at existing apartments.
Keep in mind that while L.A. has the nation's third highest number of rich renters, this is not on a per-capita basis. RentCafe notes that only 5.9 percent of the Los Angeles rental market is composed of these folks.
The city with the highest number of rich renters was New York, with a whopping 212,000 of them, the analysis found. That's about 10 percent of the Big Apple's population of renters. No. 2 was San Francisco, with 57,000 wealthy renters, and that doesn't include nearby San Jose (which has 21,000 rich renters).
The growth in high-income renters has outpaced that of rich homeowners in the last five years, RentCafe found. "There’s a market for wealthy renters, and it’s not lacking in demand," Otet says.
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