Hollywood's Revolving Door Pushes LA's Housing Market Skyward

MAILANDER’S LA-How many times on network television--if you still have a television--have you seen an excited boy or girl barely out of his teens waving a ticket on American Idol or So You Think You Can Dance or another talent magnet jumping up and down and saying, "I'm going to Hollywood!"

For every such nationwide flashing of a contestant's ticket, thousands with similar or ancillary dreams of entertainment careers, whether performing or scripting, directing or lighting or producing, arrive in Hollywood--even as people at the other end of their careers check out of the place.

Regardless of how appealing our Westside might be, or how many immigrants from Zacatecas, Central America, Korea, or Irvine come to LA in any given year, the lure of Hollywood is the single top factor that causes all of LA's rental stress.  You never see anyone jumping up and down and screaming "I’m going to Eagle Rock!" or "I'm going to Echo Park!" or even "I'm going to Venice!" But within six months or a year of arrival, they may indeed be texting from these ancillary rental markets. 

It is little wonder that while the top industry group in Hollywood is entertainment, the second leading industry is moving and storage. 

A lot of people in America and indeed throughout the world want to live in Los Angeles, San Francisco, and New York City. If you wonder why rent accounts for such a large percentage of a person's income in these three cities, this is most of what you need to know.  But LA is the outlier in a lot of senses.

Of these three top desirable US destinations, only Los Angeles, for instance, has the kind of political structure that allows it to pretend that it is growing at a breakneck pace.  The truth is that it is not; neither is New York City or San Francisco in terms of population increase.  

The top reason that New York City and San Francisco do not grow much in population is that there is neither much room nor much political will for them to grow. Los Angeles however still has all kinds of room within its city limits, and also an absentee Planning Department, indulged by a long but shallow stream of Mayors who imagine that adding density will simulate the effect of limited water boundaries that naturally shoot San Francisco and Manhattan skywards.

While anti-density types in LA--which is nearly everyone who owns a single family home, yet still a minority--maintain that we are congested beyond other urban areas (untrue--we just rearrange our traffic even less efficiently than they do), the fact is that the spacious lots and sprawling neighborhoods found from Porter Ranch to San Pedro are not exceptionally dense, but are only made to look that way because of our reliance on the automobile. 

Unlike New York or San Francisco, which have exorbitant rents because they have the kinds of industries that generate the kinds of salaries that pays for them, Los Angeles has exorbitant rents--which are unusual to a growing city, but usual to desirable cities with stable populations--not because the rental market is better prepared to pay them here than elsewhere but because all kinds of people affiliated with many strong industry groups feel they have to be here to conduct their professional lives, and will indulge very much simply to stay here for however long it takes.  

Young people--under 30's, who typically are renters--have been coming here from across the country have been coming here for over a century because of but have especially arrived in numbers since the advent of reality television. 

Some of our most seemingly established communities are actually place in which rental units exceed 70% of the housing stock.  Downtown, Los Feliz, and Sherman Oaks north of the Boulevard are all composed of over 70% rental units. 

LA's rental-to-owner-occupied ratio did not jump a lot between the 2000 and the 2010 US Census.  (Yes, what type of unit citizens live in is a key part of the Constitutionally mandated Census).  It is perched at around 62% renters and has been for about 15 years.  What we think of as "livable" cities typically keep their rental-to-owner-occupied households around 50-50.  A city that is a destination for the nation's youth can get away with erring on the rental side.

If it seems as though developers are adding rentals in LA at a faster rate than that, bear in mind that adding two rental units per every single condo added barely moves the needle on this key housing ratio much at all, even over a decade's time. 

There are other lures.  The three major colleges--as you must count FIDM now, on the strength of its sheer numbers--impact the rental market too.  People come to stand on corners.  People come to work in banks.  People come because Entourage made the place look so sleazily agreeable.  And they leave in nearly equal numbers.  It's a revolving door market with people perpetually streaming inside and out, often feeling they're stuck on the wrong side of the door. 

As the City continues to add rentals with impunity from the planners and the Mayor's office, without really growing much by population at all, homes to own will continue to remain out of reach of all but the top money makers.  And the rental market will remain as tight as it is in cities with far more roaring economies than LA's.


(Joseph Mailander is a writer, an LA observer and a contributor to CityWatch. He is also the author of Days Change at Night: LA's Decade of Decline, 2003-2013. Mailander blogs here.






Vol 11 Issue 98

Pub: Dec 6, 2013