L.A.'s housing crisis

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Most people seem to believe that there's some kind of housing crisis in the city of Los Angeles, particularly for lower-income residents. But that's where the agreement breaks down (for recent,opposing Op-Ed takes on the city's proposed condominium conversion ordinance, try Marc B. Haefele and City Councilman Bernard Parks). This week, architecture/urbanism writer and lecturer Joseph Mailander of MartiniRepublic.com debates housing policy and solutions with Occidental College professor Peter Dreier, director of that school's Urban & Enviromental Policy program. But first, they'll sketch out the contours of what exactly they think this housing crisis really is.

The missing rungThe gap in the market is starter-homes, not apartmentsBy Joseph Mailander
Hey, Peter, whatever else you and I may disagree on, I think we can both agree that there is indeed a housing crisis in Los Angeles that affects all kinds of people. And I hope we can agree that the crisis is all about the lack of afforable homes for the city's service-sector workers, naturalized citizens and young creatives. (I don't think L.A.'s rental market is in crisis -- I simply think we have too high a percentage of rental units to home units.) To me, it's prospective south-of-median homebuyers who most feel that there's a housing crisis in L.A. The crisis exists for the people who by the measure of the past couple of generations should be able to afford a starter home here in the city, but can't.

I also don't think that the city is in crisis because of its population growth. The city of L.A.'s population grows by about 40,000 a year, the county over double that. I'm not sure that growth in units is as inelastic as the economists say (we produce nearly a unit per every two new people per year), but the growth in units is indeed very selective with regards to who it produces new units for. And that's where the crisis exists.

L.A. remains an exciting city culturally, and it's certainly a great place to come for three very different kinds of people: documented immigrants, aspiring creatives and the well-to-do. The well-to-do are fine, but the market is not building homes for the "workforce housing" service sector. Immigrants and creatives arrive and after five or 10 years only small percentages are positioned to purchase a house. Here's the thing that slams everyone other than the well-to-do: the housing market in Los Angeles mostly works to serve only the affluent and double-income professionals, because the returns to the builder and the contractor are so much more promising than they are for building starter homes. There are "missing rungs" on the housing ladder, and the missing rungs are all south of the median.

To me, the missing rungs are what constitute the real crisis. For immigrants and aspiring artists, service-sector personnel and the others who come to L.A. to achieve something, all are becoming increasingly less likely to climb any kind of a housing "ladder" over the course of their Angeleno lives, because so many rungs on the ladder are missing. Properties on the market are either significantly spendy or significantly distressed, and there is little to choose in between.

The mayor and City Council certainly talk quite a bit about taking steps to make housing more affordable. They are mostly on the same page: they all say L.A. needs more affordable housing. Unfortunately, their primary solution is to offer a costly, development-oriented construction program that does more for the construction and development communities than it could possibly do to fix the housing crisis. Their solution is to make those who already have lived here for years pay for building mere fragments of missing rungs that will service very few people. They don't seem interested to incentivize the market for the kind of housing we most need; instead, they seem more interested in punishing both market and taxpayer in bringing housing to the city that serves mere fractions of populations.

I always marvel, Peter, when I attend an architecture show like Ca-Boom here in L.A. There are all these solutions available for entry-level housing: there are pre-fab houses that can be built for $200,000 and even micro-housing for $100,000 or even less. Factoring in lots and hookups, certainly houses that enable dignified living for a price in the $200,000-325,000 range -- the most pronounced missing rung -- are possible. These are often precisely the kinds of units that both our artisan and immigrant classes find desirable; interest is always very high at the shows; they, more than any other kind of housing I see, are poised to become the rungs on the housing ladder.

Alas for us, spec developers are building the kind of housing we need least: the spendy, north-of-median kind. Not enough are building the kind of housing we need most. The city needs to figure out ways to incentivize developers to do that. Until it does, lower-tier housing will remain in crisis.

Joseph Mailander is a writer and lecturer on architecture and urbanism who often nags the city of Los Angeles about housing issues. He edits the blog MartiniRepublic.com, which features a special category on architecture and urbanist issues, martinirepublic.com/la+u.


Solve the housing crisis Peter Dreier
The housing crisis—a shortage of affordable homes for sale and for rent—is not confined to Los Angeles. It is a national crisis. And its cause is political, not economic. As a nation we have the resources, the technology, and the know-how to solve the housing crisis. What we lack is the political will.

In Los Angeles, where the crisis has reached epidemic proportions, there's a growing political movement for housing reform. Leading the charge is Housing LA, a broad coalition of labor unions, community groups, tenant organizations, and others. This coalition is sponsoring a "Tent City" rally in front of City Hall this Thursday and a march to City Hall on April 25. But it isn't only grassroots groups that are concerned about this problem. Elise Buik, CEO of the United Way of Greater Los Angeles, says that she hears over and over from CEOs and business leaders in L.A. that they are having increasing difficulties recruiting and maintaining staff because of the lack of affordable housing. So the shortage of housing not only hurts the poor and the middle class, it also harms our business climate.

Here is how Livable Places, a nonprofit organization that is part of the Housing LA coalition, describes the area's housing crisis:

The housing market is broken. Most developers are only building expensive new apartments and houses. Some owners are also evicting poor and middle-class renters to convert their apartments to high-priced condominiums.The gap between the rich and the working poor—those who can afford housing and those who cannot—grows wider. Creating more affordable housing is necessary if we are to restore the middle class in Los Angeles.

Here are some basic facts, provided by the Southern California Association for NonProfit Housing (http://www.scanph.org)

• Los Angeles has one of the lowest homeownership rates in the country, at 39% of all households.

• In May 2006, the median-priced single family home in LA sold for about $502,727. This is more than an 18% price increase from May 2005.

• The monthly mortgage payment (including taxes and insurance) needed to buy the median-priced Los Angeles home (assuming an interest rate of 7%, a 10% down payment, and a loan period of 30 years) is $4,043/month. A family would need to earn about $147,018/year to support this mortgage, assuming they spend no more than 33% of the family's income.

As a result, homeownership is out of reach for most people holding the following jobs (with typical incomes in parenthesis):

High school teachers ($60,537/year)
Fire fighters ($66,307/year)
Patrol officers ($67,693/year)
Registered nurses ($67,755/year)
Physics professors ($70,372/year)
Electrical engineers ($81,108/year)
Pharmacists ($95,280/year)
Judges ($113,682/year)
Lawyers ($136,460/year)
Dentists ($140,572/year)
In Los Angeles County, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,269. In order to afford this level of rent and utilities, without paying more than 30% of income on housing, a household must earn $50,760 annually. Assuming a 40-hour work week, 52 weeks per year, this level of income translates into a Housing Wage of $24.60.

The state minimum wage worker earns an hourly wage of $6.75. In order to afford the FMR for a two-bedroom apartment, a minimum wage earner must work 145 hours per week, 52 weeks per year.

Or look at it another way: In Los Angeles County, the average renter earns about $15.33 an hour. In order to afford the FMR for a two-bedroom apartment at this wage, a renter must work 64 hours per week, 52 weeks per year. More than half (53%) of renters in L.A. County spend more than 30% of their income on rent, a percentage that is higher than the state (47%), and the nation (41%).

As a result, rents in Los Angeles are out of reach for:

Waiters ($17,216/year)
Sewing machine operators ($18,151/year)
Food preparation workers ($18,750/year)
Maids ($19,308/year)
Childcare workers ($21,368/year)
Janitors ($22,535/year)
Security guards ($22,736/year)
Receptionists ($24,751/year)
Retail salespersons ($25,756/year)
Office clerks ( $26,311/year)
Secretaries ($32,337/year)
Truck drivers ($35,937/year)
Social workers ($39,346/year)
Retail managers ($39,514/year)
Licensed vocational nurses ($41,111/year)
Computer support staff ($44,917/year)
Electricians ($49,829/year)
Paralegals ($51,429/year)
Clergy ($52,237/year)
Many working families live in overcrowded and unsafe buildings far from their work, which contributes to traffic congestion and neighborhood blight. There are roughly 48,000 homeless individuals in Los Angeles—the largest homeless population in America. And according to Bob Erlenbush of the LA Coalition to End Hunger and Homelessness, about 250,000 people in LA County experience homelessness at some point in the year.

The city's and the region's housing crisis is exacerbated by widening inequality and growing poverty. Recent reports from groups as different as the United Way the Los Angeles Alliance for a New Economy , and the UCLA Economic Forcecast all agree that the widening economic divide, and growing poverty, is a serious problem in the LA area.

According to a new report by UCLA's Anderson Forecast , L.A. has higher levels of income inequality than has the rest of the nation. Meanwhile, the percentage of those earning middle class wages in L.A. ($50,000 to $75,000) has been steadily declining. According to the United Way's "Quality of Life in L.A." report, more than one-quarter of people in L.A. County live in poverty. According to LAANE, almost 4 million L.A. County residents— about 40% of the population—qualify for anti-poverty assistance. Most of them are in working families.

Cities cannot solve the entire housing crisis on their own, but they have an important role to play. Cities are responsible for zoning and code enforcement. They can also generate local funds to supplement federal and state subsidies.

The Housing LA coalition believes, and I agree, that it's time for L.A.'s Mayor and City Council to approve a comprehensive plan that gives people from all walks of life more housing choices: the choice of a home that meets your budget, the choice to stay in your neighborhood, the choice to live near your work, the choice to get off the street. With the right leadership, we can build many more homes that people can afford, as well as protect the ones we have.

There are more than 100 high-rise residential buildings in the L.A. development pipeline. Few of them have any affordable housing. We cannot simply build more luxury housing and expect that the benefits will "trickle down." In fact, the opposite will occur. This will make the housing crisis worse, not better. Housing prices will "trickle up," as we're seeing across L.A., especially downtown, already. It will promote gentrification.

In November 2006, L.A. residents sent a clear message that they want our Mayor and Council Members to address the city's housing crisis. In 13 out of 15 council districts, strong majorities voted for new housing bonds, propositions 1C and H. Reliable and practical ways to increase housing choices do exist.

Housing LA's 3-point plan to solve the problem includes the following:

1. Commit to long-term funding for Los-Angeles' Housing Trust Fund. Because there is not a quick fix and it will take years to build the homes we need, the Trust Fund must have a reliable dedicated source of revenue.

2. Protect the affordable homes we have. Many cities limit the demolition and conversion of apartments and residential hotels. LA must do the same. Rent control laws must also be enforced to ensure that people are not illegally forced out of their homes.

3. Build mixed-income neighborhoods. In over 170 cities, when developers build new apartments, condominiums or houses they must make some of each development affordable to people with low and moderate incomes. We need to do this in Los Angeles as well.

Housing is costly to build. It requires land, building materials, and financing. Land in greater LA is expensive. Its costs are exacerbated by "snob zoning," especially in many suburbs, that requires large lots in order to build single-family homes. By doing so, they keep out rental housing and low-income families. Zoning changes that allow for more dense development— and therefore cheaper costs per unit—is one solution. But subsidies are needed, too. Even a nonprofit group building housing in L.A. can't build a unit of housing for less than about $200,000 per unit. And I'm not talking about a fancy condo with lots of amenities. This is bare bones—simply meeting basic health and safety codes. Waiving some fees can help, but it won't change the basic equation.

Yes, we need more housing assistance from Washington and Sacramento. But there are things that city officials in LA can do, now, to address our housing crisis. Its all about politics.

Peter Dreier is E.P. Clapp Distinguished Professor of Politics and director of the Urban & Enviromental Policy program at Occidental College. He is coauthor of three books: Place Matters: Metropolitics for the 21st Century; The Next Los Angeles: The Struggle For A Livable City; and Regions That Work: How Cities and Suburbs Can Grow Together; and co-editor of Up Against the Sprawl.


Make that an unclear messageBy Joseph Mailander
Peter, of all the comments that you've tucked into your response today, I find that your comment on the election of November 7 was far more negligent of fact than any other comment, so I'll focus on that. You said:

In November 2006, L.A. residents sent a clear message that they want our Mayor and Council Members to address the city's housing crisis. In 13 out of 15 council districts, strong majorities voted for new housing bonds, propositions 1C and H. Reliable and practical ways to increase housing choices do exist.
In fact, the L.A. residents who voted in the November election defeated Measure H, even though they had been expected to pass it. In fact, the more voters found out about the way the Affordable Housing Bond worked—as a property tax that handed more taxpayer money to developers and contractors than it did to L.A.'s homeless and disenfranchised—the more likely they were to oppose it. (Proposition 1C, a statewide measure, can't be considered a message to city officials either.)

Facing no organized opposition and outspending their opposition by a factor of thousands, the affordable housing bond backers nonetheless failed to pass with the two-thirds vote that other kinds of public works bonds routinely attain. This can scarcely be termed a "clear message."

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