The impact of Los Angeles' postrecession housing crisis became clear in 2014, when a UCLA report found that L.A. is “the most unaffordable rental market” in the United States. Since then, L.A. has seen renters become the majority of households in the market. And earlier this year, a report marked a 23 percent rise in homelessness countywide, a number that some experts say is directly tied to out-of-reach rents.
To kick off an awareness campaign called the Renter Week of Action this week, a number of organizations released an analysis of the city's and nation's increasing rent burdens, noting in a summary that renters from coast to coast now “face a toxic mix of rising rents and stagnant wages.”
The “When Renters Rise, Cities Thrive” report from National Equity Atlas, a partnership between the nonprofit PolicyLink and the USC Program for Environmental and Regional Equity, found that renters now compose 61 percent of the households in L.A. and that a vast majority of them (another 61 percent) pay too much for rent, according to federal guidelines.
Five of the top 10 cities nationwide with the worst rent burdens are in California, with Los Angeles No. 10 on that list, says PolicyLink research associate Angel Ross. “The story in Los Angeles is worse than in the nation as a whole,” he says.
After looking at U.S. Census Bureau data from 2000 to 2015 for the 100 most populous cities, the analysis found that renters now compose a majority of households across those markets. The Los Angelization of the American housing scene is not good for the economy, it concluded.
And, also like in L.A., the percentage of income that's going toward rent nationwide is too high. If renters paid 30 percent or less of their income on rent, they'd have an extra $6,200 a year to spend on other things. The 30 percent threshold was established by the federal government in 1937 as “a rule of thumb for the amount of income that a family could spend [on rent] and still have enough left over for other nondiscretionary spending,” according to the Census.
A report in July found that it would take $109,543 in annual income — a figure that makes its earners part of the top one-fifth of income earners in the United States — to secure an “average” ($2,556 per month) two-bedroom apartment in Los Angeles.
The “When Renters Rise” analysis found that if L.A. renters paid 30 percent or less of their income on housing, they would have an extra $8,000 a year to spend on other stuff. Disposable income would increase by 19 percent for African-Americans and 15 percent for Latinos, it found.
“This is money that households are forgoing,” Ross says. “If we could put that money back into family budgets, it would go right back into the local economy.”
During the span between 2000 and 2015, rents in L.A. grew 25 percent on average, Ross says. Real income, adjusted for inflation, actually decreased 6 percent, he says. “It's a recipe for displacement.”
The report came as the Legislature recently approved a package of bills to address the Golden State's housing crisis. These include a proposed $4 billion bond to build affordable housing, a $75 fee on mortgage refinancing paperwork to subsidize housing and an easing of construction regulations. The bills are on the desk of Gov. Jerry Brown, who can approve them or veto them.
The legislation is “tackling the not-in-my-backyard obstacles … to help ensure the housing actually gets built,” state Sen. Nancy Skinner of the East Bay said during a news conference.
It's the kind of thing the authors of “When Renters Rise” want to see. They're also encouraging cities to offer greater protections for renters on the edge of homelessness and more support to renters' nonprofits and bargaining organizations.
“It's about getting organized,” Ross says. “Renters are the majority in the largest 100 cities, but there's a strong bias in local government toward home owners. There's power in renters getting together.”