Wanted: Housing Strategy
For the first time in nearly a decade, home prices are on the rise in the San Fernando Valley--good news for homeowners who watched their property values collapse during the recession of the early 1990s and then remain depressed by the 1994 Northridge earthquake. In 1997, the number of single-family homes sold in the Valley jumped 10% from the year before and the median price climbed 3% to $165,833. Condo sales increased 11% and the median price rose 3% to $91,367. Although still well below the 1989 peak, rising housing prices are yet another sign that the Valley’s economy is rebounding from the loss of aerospace jobs and that competition for housing is intensifying.
That’s the good news. The bad news is that safe, affordable housing climbs slowly out of reach of thousands of poor and middle-income families across the Valley--a suburb built on the dream of home ownership. As property values sank over the past seven years, houses became as affordable as they had been in a generation. Rents stagnated. The press for affordable housing in city and county bureaucracies waned. But as the market again begins to heat up, the need for a progressive and reasoned affordable housing strategy grows.
In Los Angeles, the majority of residents rent. Last month, 93% of all available apartment units in the Valley were occupied, putting pressure on many landlords to raise rents for the first time since before the Northridge earthquake. Citywide, average rent for a two-bedroom apartment runs $850--out of reach for many families. As many as 40,000 families make do in illegal dwellings such as converted garages. As rents rise along with home prices, the gulf of affordability grows. More money each month goes to rent and less toward a down payment on even a moderately priced home.
In the wake of the Northridge quake, billions of federal dollars poured into the Valley. A healthy portion of them funded construction of subsidized homes and apartments--which require residents to meet certain income limits. Subsidized home purchases also carry resale restrictions. That’s a good start but not nearly enough. Working with private developers, city and county officials can build affordable units that carry none of the stigma generally associated with subsidized housing.
For instance, the city can offer so-called density bonuses to developers. The bonuses essentially allow developers to build more apartments or homes than zoning allows in exchange for a certain percentage of affordable units. It’s a fair trade that often pencils out nicely for the developer and achieves a public goal at little cost to taxpayers. Plus, the process integrates affordable housing with market-rate units rather than creating neighborhoods solely of cheap housing. Although the city’s General Plan encourages small density hikes to accommodate affordable housing, Los Angeles officials rarely offer them.
The time to start thinking hard about affordable housing is now--before the market really gains steam. And not just for altruistic reasons. The affordability of housing is a key factor in economic growth. In Boston, for instance, an economic slowdown in the mid-1980s was blamed in part on skyrocketing home prices. Workers simply could not afford to live near their jobs. In Southern California, the answer has always been to expand the urban landscape to cheaper land--out to Santa Clarita, Lancaster or Thousand Oaks. But sprawl has reached its limit.
Creative ways exist to recycle aging housing stock in the Valley. They just take creative minds to implement. For instance, the city could offer more incentives to developers willing to build in older neighborhoods or support dense development around transit stops. There’s no reason rising home prices should not come as welcome news to all residents.
