Seek Creative Housing Solutions

Anyone with his or her own home knows the warm, happy feeling that comes with reading news about the rebirth of the San Fernando Valley real estate market. As home prices statewide surge to their highest levels ever, prices in the Valley are slowly climbing back to levels not seen since the boom of the late 1980s. That means windfalls for more recent buyers and a gradual return of equity for owners who bought when prices were at their peak.

Good news, right? Generally, yes, since homes represent the largest single investment most people hold. But not for residents saving for their first home. Despite some of the lowest interest rates in memory, many first-time buyers with low or moderate incomes watch as climbing prices lift the American Dream out of their reach.

In the apartment market, the turnaround in property values has had similarly mixed results. Rents over the past decade have been largely stagnant, essentially giving renters a break over time. Countywide, though, average rents have crept up 6% over the past year to $654--their highest levels since the early 1990s. Good news for apartment owners. Bad news for poor families as the cost of housing rises faster than inflation.

Defying that trend, average Valley rents have fallen about 3% over the past year, dragged down by cheap rents in some poorer neighborhoods. But economists don’t expect that to last as pressure builds. Already the Valley’s vacancy rate is half what it was a year ago. Builders are filling part of the demand in high-end apartments, mostly in the trendier neighborhoods along the Ventura Freeway.

The trick in the months ahead will be to balance the needs of lower-income residents with the harsh forces of the market. This is the time for creative thinking on the part of city planners, such as encouraging the use of density bonuses that allow developers to build more apartments if they provide some units at below-market rates. Thinking ahead can help make sure the current boom is enjoyed by all.