PLATKIN ON PLANNING-For Angelenos who are true believers in the supposed “law of supply and demand,” LA’s worsening housing crisis remains a mystery.
According to them, soaring rents, declining home ownership, and out-of-control homelessness, have a simple cure: build more housing, especially near transit. Furthermore, they also claim their “build more housing” remedy delivers other benefits; it reduces traffic congestion, increases transit ridership, and slows or reverses climate change.
But, these true believers, whether from City Halls, academia, mainstream media, Chambers of Commerce, or real estate lobbying organizations, like Abundant Housing LA, have a serious mystery on their hands. Up-zoning is not working as they predict because it is making the housing, transportation, and climate crises worse, not better.
As I will show, housing construction is way up in LA, but so is homelessness, traffic congestion, and climate change. As for transit ridership, it continues to drop, and is now back to 1985 levels, when the city of Los Angeles had one million fewer residents and Los Angeles County had two million fewer.
Here are some clues to unravel this Los Angeles mystery. In the process, we shall also discover why “building more housing” is a charade, nothing more than a real estate scam whose beneficiaries are investors and their cronies.
Evidence that Los Angeles is already “building more housing.”
In May 2019 Curbed LA mapped 33 new high rise residential towers, most in Downtown Los Angeles and the Wilshire Boulevard Corridor.
Also, according to Curbed LA, the Los Angeles region is experiencing a boom in housing construction.
- Builders will complete 10,000 new homes before the end of 2019.
- The first half of 2019 witnessed 9,400 new units, more than all of 2018.
- From June 2018 to June 2019, developers completed 10,680 new housing units, double from June 2017 to June 2018.
- At the end of June 2019, 28,000 new housing units were under construction.
These trends are verified by LA City Planning’s most recent housing report, from January – March 2019.
- By the end of 2018, the City of Los Angeles granted 27,366 housing entitlements.
- The City approved 10,807 density bonus units in this same time period, also verified by the Los Angeles Times.
- In the same time period, the City approved 5,429 Accessory Dwelling Units.
Likewise, the City of LA’s Geo Hub master data base, lists 17,427 permits that the Los Angeles Department of Building and Safety recently issued for new housing units.
Furthermore, this amazing Geo Hub map of every building in Los Angeles reveals their decade of construction. Through 2008, many Los Angeles neighborhoods have been entirely rebuilt through in-fill construction. If or when the City updates this data base to include post-2008 construction, it will reveal much more post-Great Recession in-fill housing, almost all through private investment drawn to Los Angeles from around the globe because of real estate profits reaching 20 percent per year.
Two reliable online sources confirm this data. Urbanize Los Angeles presents frequently updated project level data for the entire Los Angeles metropolitan area, describing proposed projects, those under construction, and completed projects. Anyone who wants precise details on “hot” neighborhoods experiencing a construction boom, such as Downtown Los Angeles, Chinatown, Little Tokyo, Arts District, USC environs, Koreatown, Wilshire Center, Miracle Mile, Beverly-Fairfax, Beverly Center adjacent, Hollywood, North Hollywood, Warner Center, and many other neighborhoods, can log on to the “Urbanize Los Angeles” website for details on every local real estate project.
Likewise, the Los Angeles Development Map complements Urbanize Los Angeles. It is updated daily and presents parcel level data on real estate projects, dividing them into three color-coded categories: proposed, under construction, or completed.
Looking for clues to solve the mystery: Given such detailed documentation of LA’s construction boom, much of it apartments built near transit lines, are there any clues to explain why transit ridership is still plummeting, and why traffic congestion, homelessness, and greenhouse gas levels are still rising? The answer is yes. There is no shortage of clues for those who care to look.
Clue #1. Despite the construction of new housing throughout Los Angeles, homelessness continues to rise. The latest figures show that Los Angeles County now has 59,000 homeless people on any given night, an annual increase of 12 percent. In the City of Los Angeles, the 2019 figure is 36,000 homeless people, an increase of 16 percent over 2018.
Clue #2. The new housing in Los Angeles is expensive, while the unmet demand is for affordable housing. One-bedroom apartments in Los Angeles now rent for $2,491 a month on average, a 9.6 percent increase over 2018. Two-bedroom apartment rents average $3,279 per month, a 7.7 percent increase from 2018. Since these are median rents, the costs of new market housing in popular areas (e.g. Hollywood, Miracle Mile, DTLA) is considerably higher, between $4,000 to as high as $10,000 per month, with penthouses leasing for even more. As a result of this mismatch, the Los Angeles area has a shortage of over 500,000 affordable units -- which private developers cannot fill. This discrepancy is then compounded by many City Hall housing policies and programs to promote even more expensive housing.
Clue #3. As a result, Los Angeles has 110,000 vacant housing units, in part because the rents for vacant apartments are too high for those who are desperate for a place to live, but can only afford low-priced housing. This is what fuels our housing crisis, including homelessness, rent-gouging, over-crowding, and out-migration.
Clue #4. To address vacancies, landlords have four options in lieu of rent reductions, which they do not pursue:
- First, they can flip the buildings, since “Never Occupied” units increase sales prices because they are not subject to FHA and HUD flipping regulations.
- Second, property managers can slowly rent out their empty units because their buildings’ profit margins are high enough to weather vacancies.
- Third, they can resort to Airbnb since it is so profitable. Two months of short-term rental income is equal to a one-year lease for the same apartment.
- Fourth, they can increase the amenities in high-priced buildings to draw potential high-income renters away from competing properties.
Clue # 5. Most transit riders are low income, while most tenants in new apartments, especially in buildings that are transit adjacent, are high income. In fact, they have often displaced low-income transit riders. In Los Angeles these well-off tenants largely own cars and use them for most trips, in lieu of buses and subways.
Clue #6. Despite the expansion of the transit system, overall vehicle miles travelled continue to grow in Los Angeles, and with it, an increase in traffic congestion and greenhouse gas emissions responsible for the climate crisis.
Clue #7. Affordable housing is disappearing faster than it can be replaced, according to Mayor Eric Garcetti. Larry Gross, from the Committee for Economic Survival, has documented how the City of Los Angeles has approved over 25,000 Ellis Act evictions since 2001. This figure does not include cash and key evictions, through which landlords informally pay tenants to disappear from rent stabilized units, as well as ruthless landlords who coerce their tenants to exit by deliberately allowing their residential buildings to become unlivable.
Clue #8. Last, but hardly least, is the growth of economic inequality in Los Angeles, similar to the rest of the country. Nationwide, the top 10 percent now own as much wealth, much of it accumulated through real estate speculation, as the bottom 90 percent. Our growing housing crisis is not simply the result of relentless increases in housing prices, but the stagnant or declining income and wealth of people priced out of housing.
What next? Based on the above information, it should be clear that the City Hall’s multiple programs to up-zone parcels and presumably increase housing production have totally failed to reduce homelessness, automobile driving, or climate change. Furthermore, as a city planning analyst, I foresee the same trends persisting for years to come. City Hall will continue to promote up-zoning as its fact-free miracle cure, and the result will be increased economic inequality and deepening housing, transportation, and climate crises.
In addition to the continuous statewide up-zoning shenanigans of State Senators Scott Wiener and Nancy Skinner, LA’s City Hall is also busy dishing out un-planned increases in heights, mass, and densities (i.e., up-zoning) in multiple ways. These goodie-bags include discretionary zoning actions (e.g., zone changes and zone variances), Small Lot Subdivisions, Transit Neighborhood Plans, Community Plan land use ordinances, Community Plan Implementation Ordinances (CPIOs), Transit Oriented Communities and SB 1818 density bonuses, and re:code LA. Whether these programs lead to more flipping or more construction, they will bolster the same crises described above.
So, why repeat the same mistakes, again and again, if it is obvious that they are counter-productive? The answer comes from LA Times business columnist David Lazarus: trickle-down economics. Up-zoning through the many planning programs listed above is the municipal version of trickle-down economics. Let the rich get richer through statewide laws and local ordinances that up-zone their property, and a rising tide of new private developments will trickle down to benefit everyone else.
According to David Lazarus this trickle-down approach is absurd: “There is no empirical evidence – none whatsoever – that trickle-down economics delivers as promised, bringing more jobs, higher pay, and better conditions to millions of people. The reality is that as the rich get richer, the rich get richer, full stop. They buy more houses and cars and boats and stuff.”
That is exactly what is happening in LA. Up-zoning produces instant wealth for property owners, who then get richer, whether they flip their properties or build large, lucrative buildings on them. These beneficiaries comprise what is politely called the real estate wing of the political donor class. They return a fraction of their enormous gains as political contributions, which then ooze through the corridors and stairwells of City Hall. Pay-to-play -money enters at one end, while real estate-friendly up-zoning decisions, policies, programs, and ordinances emerge at the other end. The donors and their recipients do just fine, while the rest of us, including many cheerleaders, are subject to overcrowding, rent increases, rent gouging, evictions, homelessness, traffic congestion, and a worsening climate.
** (Note to readers. Because so many decision makers and their backers avidly support up-zoning schemes (unplanned increases in height, density, and building size regulations for privately owned parcels), I have added extra online references to back up this column.)
(Dick Platkin is a former Los Angeles city planner who reports on local planning controversies for CityWatch. He serves on the board of UN4LA (United Neighborhoods for Los Angeles) and welcomes comments and corrections at email@example.com.) Prepped for CityWatch by Linda Abrams.