Will Building More Housing — Even Expensive Housing — Ultimately Make L.A. More Affordable?
People in San Francisco, where $5,000 rents are ho-hum, scoff at our housing crisis.
What they don't understand is that incomes in L.A., which is nearly three-quarters nonwhite, are far lower. The U.S. Census Bureau reports that the per capita individual median income here is $28,555. In San Francisco, it's a whopping $49,986.
That could help explain why, in 2014, a UCLA report famously declared that Los Angeles was the "most unaffordable rental market" in the United States. The gap between income and leases was greater here than in any other major U.S. city, researchers at UCLA's Luskin School of Public Affairs found.
You can feel our pain in places like Westwood, once a haven for UCLA students, where the median two-bedroom apartment now lists for $4,200 a month, according to Apartment List. Downtown, once a destination for starving artists, now is one of the most expensive rental neighborhoods in L.A. The median price for a two-bedroom there is $3,350.
"Los Angeles is among the most burdened rental markets in the nation," says Jonathan Spader, a senior researcher at Harvard's Joint Center for Housing Studies.
The center says that two-thirds of renters in L.A. with median individual incomes are "severely burdened" by rent costs. That means they're spending at least half their monthly pay on housing. That is bad for our economy, Spader says. Folks who have severe rent burdens spend 38 percent less on food, 55 percent less on health care and 60 percent less on transportation than folks without such a burden.
"Those are dollars not going into other segments of the economy," he says. "There clearly is impact."
The problem is that the construction of new units is not keeping up with population growth. Los Angeles County is now home to more than 10 million people. The local rental vacancy rate is less than 3 percent — less than half the national average. Rents are up 6.8 percent compared with last year, according to Apartment List. The California Housing Partnership Corporation says the county needs nearly half a million new units just to catch up with demand for affordable rental housing. What's more, the units that are being built are often for higher-income folks. Profit motives, pricey real estate and high construction costs make it difficult if not impossible for developers to justify building lower-rent projects.
Governments have battled developers in court over requirements mandating that a slice of affordable housing be built in new rental developments. The California Supreme Court last year ruled that such mandates are legit.
There's also a raging debate in L.A. over how much development — and what kind — is good development. One side says that allowing dense, high-end rental projects in neighborhoods only increases the median prices in Los Angeles and hurts middle- and low-income residents.
"We have to be building housing," says Mike Dennis, director of community organizing at the East L.A. Community Corporation. "But market-rate housing only widens the divide. Folks will use that argument to continue to facilitate gentrification" — which, he argues, only puts low-rent residents on the street.
The other side contends that adding units, even high-rent ones, will increase supply and therefore ease vacancy rates — even vacancy rates for lower-priced housing.
Most of the housing experts we talked to agree that adding units at any price point will ultimately relieve our market stress. They blame political pressure from the Not-in-My-Backyard crowd for the slow pace of development here. The NIMBYs are clinging to an antiquated, Mayberry vision of L.A., opponents say.
"We need greater density," says Rushmore Cervantes, general manager of the Los Angeles Housing and Community Investment Department (HCIDLA). "We desperately need to go vertical. But people don't necessarily want high-rises in their communities. It's not tall in my backyard."
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Spader of Harvard says that new, high-end developments do tend to pull up rents in their particular neighborhoods. But he says that the effect is downward when you zoom out and look at the whole market.
"Adding supply has to be a critical, central part of any solution," Spader says. "At a metropolitan level, it's pretty clear new development eases rent prices. When you get to individual neighborhoods, that's where it's less clear."
UCLA urban planning professor Paul Ong concurs, saying solutions have to be implemented on a state and regional level, even if they come at the cost of neighborhood views.
"We essentially have a culture that is opposed to density," he says. "We're of the belief that it is our right to have single-family homes on separate parcels with lawns.
"A longer-term political discussion needs to be carried out about not just what's good in my backyard but about what's good for the region as a whole. We need a balance."
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