L.A. Becoming City of Renters

By JOCELYN Y. STEWART

Nov. 29, 2001 12 AM PT

TIMES STAFF WRITER

At a time when the rate of homeownership has peaked nationwide, Los Angeles increasingly is becoming a city of renters, with a lower proportion of homeowners than any city except New York, according to a Census 2000 analysis released this week.

Nationwide, the rate of homeownership rose to 66% last year. But in Los Angeles the trend is reversed, with 61.4% renting and only about 38.6% of households owning their homes. New York is the only city with more renters: 69.8%.

Released this week by the Census Bureau, the data show that the American dream has become an elusive goal for many residents of the nation’s major cities.

“The implications are tremendous and drastic,” said Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola Marymount University.

“People are less secure economically and personally if they are renting,” Guerra said. “They have no control over a variety of different aspects of their quality of life.”

Studies have shown that homeowners are more likely to vote and more likely to become involved in community institutions such as schools, churches and neighborhood groups, Guerra said.

“That creates community stability,” he said. “It improves the community’s outlook, which improves the way the community looks.”

A family’s long-range prospects are heavily influenced by whether they own a home.

“It’s still the ambition of most people to try and own a home,” said Gary Blasi, a UCLA professor of law who has studied housing in Los Angeles. “When you look at the long-term prospects, people who own homes are more likely to able to accumulate wealth and pass it on to future generations.”

Paying down a mortgage each month can eventually help elevate a working-class family to middle-class status.

Like Los Angeles residents, many in the nation’s other big cities are having less success than others in becoming homeowners and accruing the benefits.

In Chicago, 56.2% of the city’s units are renter occupied; in Houston, 54.2%; in Detroit, 45.1%

In Los Angeles, experts say, the low rate of homeownership is rooted in a mix of factors including the high cost of land and building, a huge gap between wages and housing costs, and ineffective housing policies.

“We have had no coherent policy on housing either at the city, county, regional or state level,” Guerra said. “Even the national policy doesn’t take the situation of California into consideration.”

The rate of homeownership in the city has declined even as the number of people owning their homes has increased slightly. That growth has been offset by a vastly increased population, many of whom are renters.

The news is brighter for those who live outside the largest cities and in states such as West Virginia and Minnesota. In West Virginia, three out of four households are owner-occupied. In Minnesota, the rate is 74.6%. Metropolitan areas in Florida have some of the highest rates of homeownership.

In other parts of Southern California, the rates of homeownership more closely parallel the national level. In Orange County, the rate is 62.3%. In Ventura County it’s 66.2%. The rate for Los Angeles County is just 49%, the lowest of any metropolitan county west of the Mississippi River.

Across the nation, the rate of homeownership has increased, following a trend.

The Great Depression forced the national homeownership rate to 43.6%, its lowest level in the century. By 1960, the rate had reached 60%, fueled by a strong post-World War II economy, easier financing and favorable tax laws. And in 1990, it was 64%.

But pressures in Southern California make homeownership much more difficult than in other areas, according to a study released this month by the Center for the Study of Los Angeles.

According to the report, the percentage of households able to buy a median-priced home last year was 36% in Los Angeles County, 28% in Orange County, 47% in Riverside/San Bernardino and 33% in Ventura.

In the city of Los Angeles, housing costs consume a larger proportion of family income than in New York City. More than 90% of low-income families spend more than 30% of their incomes on rent, according to the study.

Of Southern California residents polled for the study, 55% said they are pessimistic that the next generation will be able to afford to to buy a home. About 80% said it was difficult for middle-class families to find affordable housing in their areas.

The report recommends several measures to address the region’s housing problems, including revamping the permit process to make it easier for developers, penalizing cities that do not build a specified amount of housing, increased funding for affordable housing, and support for projects that mix housing with shops and offices.

“First and foremost is to recognize this crisis, because it is a crisis,” Guerra said. “Leaders need to come together, recognize this and take a look at solutions region wide.”

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On the Decline

The homeownership rate in Los Angeles was lower than the national rate in 1960 and has continued to fall over the years.

1960

Total occupied units: 876,768

Owner occupied units: 404,962 (46.2%)

1970

Total occupied units: 1,027,374

Owner occupied units: 419,801 (40.9%)

1980

Total occupied units: 1,135,230

Owner occupied units: 457,375 (40.3%)