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Housing Is More Than Shelter

Fernando J. Guerra is director of the Center of the Study of Los Angeles and an associate professor of political science and Chicano Studies at Loyola Marymount University

Los Angeles is facing many challenges today, none more acute than the shortage of housing. It goes beyond the basic challenge of too few homes for too many people.

As the economy grows, the demand for homes increases, but the incentive for the private sector to build homes decreases. The disincentives emerge in part because capital is more interested in chasing fast and easier returns in the stock market than in the real estate market. In large part, what makes the returns more difficult in real estate is the lack of a housing policy by local government. That is, both the public and the private sectors contribute to an environment where housing is not being built in Los Angeles.

Construction of new houses will meet less than half of the housing need in the state this year, according to the California Department of Housing and Community Development. Southern California, which is expected to grow to 22 million to 24 million people by 2020 (a 50% increase), faces a particularly acute problem. Los Angeles County issued a minuscule 7,803 permits last year.

The house shortage already has produced significant impact in the region, pushing the median home price for Los Angeles County to $206,700 in February. The California Assn. of Realtors’ affordability index, which measures the percentage of buyers who can afford the median price home, dropped to 36% in the region--the lowest in a decade.

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How did we get to this place? The answer lies in part in the historically decentralized local political system. Local government is more likely to respond to short-term goals of well-organized activists, while long-term policy goals such as housing are not adequately addressed. Increasingly, local government, at the behest of “not-in-my-backyard’ movements, have thrown up cumbersome legal, procedural and regulatory roadblocks that have slowed housing development. Couple this with the already high cost of land, and you have a recipe for stagnation in the residential construction industry.

Even large and well-funded development projects such as Playa Vista, Newhall Ranch and Ahmanson Ranch have been impacted. The smallest of these three projects, Ahmanson Ranch on the Los Angeles and Ventura County line, illustrates the stagnation syndrome. This proposed development of some 3,000 homes has been on the drawing boards for more than 15 years. It was approved by Ventura County eight years ago. A development agreement reduced the number of homes to be built by about 1,800 and resulted in the transfer of some 10,000 acres of land to be dedicated as permanent open space at a cost to the developer of $30 million.

Despite these and other concessions, the project continues to inch along through a bureaucratic, political and legal maze. The endless delays not only have kept more than 3,000 much-needed houses off the market, they’ve also increased the cost of building them.

Housing does more than merely provide shelter. At the end of last year, construction in Los Angeles County generated 126,300 jobs, many of them skilled, well-paying positions. Moreover, owning a home gives people a stake in their community. They become economically better off and are more socially and politically active. In addition, housing supply can have a major impact on the ability of employers to attract and retain workers.

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The greatest resource in any community is its people. Optimistic people are an even greater resource. Optimism in the future rises with homeownership. With optimism and homeownership, our local communities will thrive economically, socially and politically


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