David Lazarus wrote an article in LA Times called, "Renters priced out of L.A.". As I read, it reminded me of a lot of things I learned doing research for the article on SCAG (Southern California Association of Government) that ran in LA Weekly (2/14/07).
Here's an excerpt from the article that sets up the "Renters" LA Times piece.
Planning For Disaster
by Zuma Dogg
L.A. has settled into its role as a region filled with lesser-paying jobs and influxes of low-end workers, but housing costs are skyrocketing. Pisano concedes, “You can’t find a condo for under $500,000. The problem is, we need to build an economic base so people can afford to live here. That’s our problem. I don’t disagree that condos and housing are expensive everywhere in the region, not just L.A. If you can’t afford it, you’re gonna be angry.”
Chang Ping, author of SCAG’s annual State of the Region report, used in handing out lumps of coal each winter to the cities and counties SCAG finds most uncooperative, explains, “Manufacturing has gone overseas to China. The world’s financial market is over in New York. Many of the high-quality service jobs are in New York — and those on the West Coast are in San Francisco rather than here — like banking, retail, legal services, engineers, consultants, ad agencies.”
Because Los Angeles allowed the high-end and blue-collar companies to slip away to other cities, its overly expensive housing is now “a barrier to luring in the high-paying jobs provided by such service industries,” Ping says. “Sure, housing costs are higher in San Francisco. But the higher-paying, high-end jobs that were already there — fueled in part by Silicon Valley — have offset the high cost of housing.”
Vasishth slams L.A. City Hall’s shortsighted planning, saying, “You just can’t have the rich living downtown in expensive lofts and the poor people living further and further out.” Cities are going on a “density” kick as some kind of solution — yet there are plenty of skeptics out there.
High-density housing is not a desirable goal for space-loving Southern Californians, Vasishth says, arguing that room to breathe is one of the few pluses still on offer here: “All this new infrastructure, whether it comes from state bonds or from SCAG’s dreamy projections, would simply create more density.” Kotkin is even more dismissive, saying, “Density is a push by big developers to create very expensive housing with some pieces included for the poor — and nothing at all included for the middle class.”
Excerpt from:
Renters priced out of L.A.
by David Lazarus/LA Times
March 9 2008
(It's a) harsh reality for thousands of working-class people priced out of one of the priciest cities in the world. From housing and food to energy and entertainment, Los Angeles is increasingly out of reach for those living paycheck to paycheck.
"It's a crisis," said Gil Duran, a spokesman for Mayor Antonio Villaraigosa. "We have to have a city of mixed incomes with affordable housing for workers."
Easier said than done. But planning and public-policy experts say steps can be taken to protect the city's social and economic diversity. It's just a question of priorities.
Any discussion of getting priced out of L.A. has to begin with housing, by far the biggest expense for most people. Never mind buying. Even with the real estate market on the ropes, buying a house or condo remains a fantasy for the majority of Southern Californians.
The real story here is rentals. About 60% of L.A. residents are renters, according to the National Multi Housing Council, an industry group. That compares with a nationwide average of 32%.
The Department of Housing and Urban Development says families shouldn't spend more than 30% of their annual income on housing. But here, many people pay up to 50% of their income for an apartment.
Runaway housing costs, in turn, tend to push wages higher, which can cause the price of just about everything else to climb as businesses seek to recoup their expenses.
One reason housing prices are so high is a requirement that newly built multiunit dwellings (and condo conversions) provide at least one -- usually two or three -- parking space per unit. This inflates the cost of each apartment and discourages construction of smaller, more affordable units because developers would be required to provide even more parking.
One solution would be to waive the parking requirement for smaller apartments, thus creating an incentive for developers to place more such units on the market. And because there'd be no parking cost built into the rent, such units would (in theory) be cheaper than apartments that come with extra room for vehicles.
This could have the added benefit of increasing demand for public transportation -- presuming, that is, people would trade car ownership for reduced rent. Increased demand would hopefully spur development of commuter-friendly projects like a long-delayed Westside subway line.
But Gail Goldberg, L.A.'s planning director, said any proposal that includes cutbacks in parking tends to go nowhere. "People feel like there's already not enough parking and that people are intruding into their neighborhood. This is a difficult discussion to have."
Meanwhile, a coalition of community, religious and business interests called Housing L.A. is pushing City Hall to require developers to include affordable housing in new projects and to slow the conversion of rental units into condos.
These are worthwhile goals, but they're strongly opposed by deep-pocketed developers and real estate firms. So good luck with that.
full article
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