Housing Affordability in Los Angeles - Research Paper Example

Housing affordability in Los Angles ID: Introduction Los Angles in California remains the most unaffordable region and the main reason for this is the lack of adequate housing facility for its residents. The gap between income and housing rents is the widest in this region, as rents are going up abnormally without any corresponding increase in the income level of the residents. Although lack of political will to tackle this issue is the reason for this, few politicians who really wanted to solve the crisis realized that the problem is complex. Attending to this controversial problem have exposed such politicians to the challenges of political backlash due to the huge cost of any possible solution. However, ignoring the issue would create complicated problems such as business and human resource loss as people move to other regions, air pollution and traffic jams since number of commuters to and from Los Angles will increase as they seek residences outside LA. In addition, the existing units will be overcrowded with more people occupying same space. This will cause additional pressure on other utilities like water, gas and power supply. Hence, finding an affordable housing solution must get the topmost priority from all concerned to avoid such horrible situation. Thesis statement In order to solve the Los Angles housing affordability problem, it is essential to pursue coordinated effort that involves, strong political will, assurance towards availability of required funds on long term basis and participation of different stake holders for building dense, high rise, low-cost residential apartments The historical facts Figure given below shows the gap between the housing units built and needed during three decades from 1980 to 2010, in California. (Source: http://la.curbed.com/archives/2015/03/housing_crisis_los_angeles_construction.php ) According to sources, housing requirements in California demanded building 70,000 to 110,000 additional housing units every year during the last three decades. Doing this, especially in the coastal areas such as Los Angles would have kept the residential property prices under control. As this was not done earlier, Los Angles and central cities would now require building around 100,000 more units on annual basis. This, in any case, would be in addition to the construction of 1000,000 to 140,000 housing units to be developed by Garden State, which is currently at the planning stage. The lack of such building activity during last decades has resulted in huge increase in the cost of residential units. The following figure shows the price trend of housing units in California in comparison to the same prevailing in other parts of USA. According to available reports, there has been a large gap, almost 200 percent, in the median price trends between California and other US cities.(Barragan, 2015) (Source: http://la.curbed.com/archives/2015/03/housing_crisis_los_angeles_construction.php ) However, building of additional units as specified above would not have proved sufficient to bring down this disparity to zero level, although it was possible to narrow this gap down to 80 percent. (Barragan, 2015) (Source: http://la.curbed.com/archives/2014/10/number_of_available_apartments_in_la_is_falling_dramatically.php ) As available housing units in LA are decreasing in number with each passing year, it can be seen from the graph above that there has been almost nil availability of such units from middle of 2012. In fact, the availability figures have dropped drastically during the three years, prior to 2012-13. This further supports the cause for urgent need to have more affordable housing units in LA. Reasons behind Housing affordability problem in LA Irresponsible behavior of locals While there is great segregation of wealth in LA, people from poor background, especially Latinos and blacks can be sometimes seen residing in areas populated by rich families. This would imply that new affordable housing units must be constructed in these areas as well. However, the locals prove to be the greatest source of resistance when solutions are discussed and implemented. For example, plans for building dense houses do not get through due to the strong resistance of local residents who do not want to disturb the demography of their area by letting poor people reside along side their homes. Builders seek quick profits, which do not materialize if such delays occur in sanctioning the building plans. Hence, the problem remains.(Baraggan, 2015) Rental payments According to Harvard and ULCA reports, residents of LA are paying almost 30 percent of their total income towards housing rents. The figures available reveal that these residents paid a cumulative rent of around $ 32.5 billion during 2014, which is an increase of 5.3 percent over the rental payments done in the previous year. However, the national rental payments have witnessed an increase of 4.9 percent during this period, across the country. New Jersey-New York remains the only region that has paid cumulative rent more than LA residents have in 2014, which is about $48.2 billion. This is an indication that demands for rental properties exceed the supply. According to Zillow Inc., the web based market place for housing products, the demand for rental units shall increase more rapidly than the prices of homes in the coming years. The following table reveals the rental outgo details from different regions in USA. (Barragan, 2014) (Source: http://la.curbed.com/archives/2014/12/los_angeles_renters_paid_342_billion_in_rent_this_year.php#more ) People cannot afford to live in LA According to figures supplied by Economic Policy Institute, 57.3 percent of LA population cannot afford to live in a modest home with sufficient amenities and comforts required for decent living. However, they will continue paying the high rentals only to live in cramped units that do not offer any such facility.(Barragan, 2015) A few solutions to avoid the crisis While most effective solution would mean involvement of political will to tackle the complex problem, a few solutions detailed below can prove result-oriented. Motivating developers There are several ways to motivate developers and builders for constructing large number of housing units in LA. One such method would be providing incentives to builders and developers to go vertical in constructing taller residential buildings. However, the city planning commission must provide this relaxation by getting an undertaking from them to build only the affordable units. In addition, developers can reserve a certain number of constructed units for sale at cheaper prices to lower strata of society who are in desperate need to have a shelter.(Sinco, 2015) One fine example in this direction is the adoption of Cornfield Arroyo Seco Specific Plan in the year 2013 by the Planning Commission, which allowed developers to increase the density and height of housing units, in exchange for building affordable housing. While developers have earned profits with this arrangement, large number affordable housing units has become available to the needy public. Preservation of affordable housing units According to Coalition for Economic Survival reports, subsidized mortgage schemes prescribe limits on the rental demands by property owners. However, after the maturity of such schemes, such restrictions expire and rents increase, as demand grows, putting tenants on the mercy of these property owners. As per the estimates from National Housing Trust, new affordable housing units are not being constructed adequately, as old mortgaged housing units deteriorate rapidly or start charging market rates after the mortgage expiration. As per terms of subsidy payment for mortgaged units, the property owners have agreed to provide these units to low-income households for a period of 20 to 50 years, on subsidized rent. The agreement required verification of income proof to ensure that affordable units go to the needy poor residents. However, with lenient supervision of working of such maturity agreements, the benefit does not go to residents belonging to low-income group. Hence, proper supervision of this policy application is needed. In addition, Los Angles also has rental-subsidized housing units, built prior to 1978, with a limit on annual increase in rent. Accordingly, this has benefited the residents living in these units for many years, as they pay rents that are much lesser than the prevailing market rate. However, this has created the problems of non-preservation of these units, as they deteriorate over the period without any major repairs. The Planning Commission can look at these age-old units as an opportunity for constructing high-rise dense affordable housing units, after demolishing them. This can add to the supply of these units while providing affordable decent living to the residents of LA.(Sinco, 2015) Dense housing units are required As Los Angles is the major center of employment in the region, more housing units would result in lesser employees taking residences near their places of work. This would mean better transit facilities for these people, as they would not be wasting time and energy in commuting long distances while coming to LA for work from nearby cities. At present, this is not happening, as these working people cannot afford to pay exuberant rental charges in LA. However, considering the constraints of space, people require high-rise apartments that can make it possible for them to afford living in these apartments without paying exuberant rents. This is possible only after builders and developers in LA go for high-density residential construction projects. In this direction, the positive steps taken by city Planning Department include relaxation of space to floor ratio and elimination of open space restrictions for high-rise buildings. As down town LA offers many job opportunities, it is essential to maintain a balance between the residences and office location. This would result positively in reduction of traffic snarls due to massive commuting. Hence, adopting dense housing construction in this area would help solving the affordability problem, especially for low-income group workers. As builders are constructing projects that involve dense housing units in suburban areas of LA, they need finding ways to develop similar projects in downtown LA as well. In fact, LA needs dense housing to counter the housing affordability issues in the city. The popular demand from lower income spectrum of people living in LA city has resulted in the construction of almost 5000 dense housing units with another 1000 coming up in the city, especially downtown LA. Help from the government in providing subsidies towards such construction can ensue more of such dense and affordable housing units coming up in the city. By providing density bonus to the builders, authorities can ensure the compliance of it with an in-built condition for provision of affordable housing in such projects to lower-income group residents. Similar government action for other areas of LA will prove result-oriented in providing dense affordable housing units for the needy people.(Perry. 2007) Conclusion As figures suggest, the Los Angles affordable housing crisis will grow in the near future, with monumental increase in rental values, while the supply of new housing units will not match the increasing demand for affordable decent residential apartments from the residents. Accordingly, urgent planning is required, which should involve active political participation and speedy work by the Planning Commission to ensure that new units benefit the low-income group residents in a major way. In addition, continuous availability of funds for new building projects will ensure reduction of gap between demand and supply of affordable housing units in this region. Works Cited Barragan, B (2015, March 18) How Much Does Los Angeles Have to Build to Get Out of its Housing Crisis? Curbed Los Angeles, Retrieved April 25, 2015, from http://la.curbed.com/archives/2015/03/housing_crisis_los_angeles_construction.php Barragan, B (2015, April 8) Los Angeles’s Big Plan For Pulling Out of Its Housing Crisis. Curbed Los Angeles, Retrieved April 25, 2015, from http://la.curbed.com/archives/2015/04/los_angeles_housing_crisis_fix.php#more Barragan, B (2014, Dec. 30) Los Angles Renters Paid $ 34.2 Billion in Rent This Year la-curbed Los Angles, Retrieved April 25, 2015, from: http://la.curbed.com/archives/2014/12/los_angeles_renters_paid_342_billion_in_rent_this_year.php#more Barragan, B (2014, March 19) 57 % of People Living in Los Angles Can’t Afford to Live in Los Angles, la-curbed Los Angles, Retrieved April 25, 2015, from: http://la.curbed.com/archives/2015/03/57_percent_of_people_living_in_los_angeles_cant_afford_to_live_in_los_angeles.php#more Perry. J, (2007), We Need Dense, affordable housing in L.A. Los Angeles Times, Retrieved April 25, 2015, from http://www.latimes.com/opinion/la-oew-perry26jul26-story.html Sinco, L (2015, January 14) Three ideas for adding affordable housing in L.A. Los Angeles Times, Retrieved April 25, 2015, from http://www.latimes.com/opinion/editorials/la-ed-affordable-housing-part-2-20150115-story.html Weise. K, (29 May 2014) Los Angles Needs Half a Million More Affordable Housing Units. Bloomberg.com, Retrieved April 25, 2015, from http://www.bloomberg.com/bw/articles/2014-05-29/los-angeles-needs-half-a-million-more-affordable-housing-units Read More