Los Angeles already has the most unaffordable housing market in the United States, so you'd expect that maybe some relief was due.
Not going to happen. The USC Casden Multifamily Forecast this week revealed its projections for the next two years. The report says we should expect an 8.2 percent increase in rents by June 2016.
But wait, it gets even better:
Vacancy rates will get worse, decreasing 6 percent by June 2015 and going down another 6.8 percent by June 2016, according to the forecast.
USC Lusk Center director Richard Green tells us it's all a matter of supply and demand. He said California regulations make this “the toughest state in the country to build houses in.”
Hollywood and the Ventura Boulevard corridor would be naturals for increased residential density, he said, but “you can't get it done.”
He doesn't think rent control works because it encourages renters to stay put forever while landlords sometimes neglect their properties in attempts to push tenants out.
How about this $15.25-an-hour-by-2019 minimum wage being proposed at L.A. City Hall? It's a nice thought, but you almost have to laugh:
A report earlier this year by the National Low Income Housing Coalition found that it takes $26.88 an hour just to be able to afford an average, two-bedroom apartment in L.A. today.
“People should have more to spend on rent,” Green said. “But doing a minimum wage increase just for one city, I'm not sure that it's a good idea.”
That just leaves building more housing, a proposition that has been thoroughly opposed by L.A.'s powerful NIMBY class.
Owning property zoned for apartments outside California usually means you are free to build within the confines of the law.
Here and, especially in L.A., it means you still have to jump through political hoops. And even then there's no guarantee you'll be able to use your land as desired.
“Here, to do anything large you have to go through a difficult process,” Green said.
As it is, L.A. has the second lowest vacancy rate (3.3. percent) in the state, the forecast found. San Diego (3.2 percent) is number one. Through June, the “paid a monthly average” rent in L.A. was $1,716, a 3.9 percent increase over the previous fiscal year.
The area that includes Santa Monica, Venice and Marina Del Rey had the highest rents in the market through June—$2,618, the forecast says.
The only solution, Green says, is to overcome NIMBY voices and political cowardice to create more bedrooms in Los Angeles.
“More building needs to happen,” he says.