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PLANNING WATCH - Homelessness is bad in LA, but it will get even worse for multiple reasons:
1) Economic inequality is growing in the United States, pricing more people out of housing, especially in the racially-integrated Alta Dena area. According to the Pew Research Center, recent income gains were concentrated at the top. In contrast, middle income families and the poor have experienced the greatest economic decline.
“The growth in income in recent decades has tilted to upper-income households. At the same time, the U.S. middle class, which once comprised the clear majority of Americans, is shrinking. Thus, a greater share of the nation’s aggregate income is now going to upper-income households. and the share going to middle- and lower-income households is falling.”
2) The small minority of the US population with rising incomes often invest in real estate, driving housing prices even higher and pricing more people out of housing. According to the Los Angeles County Economic Development Corporation:
“11 percent of households in Los Angeles County can afford to purchase a median priced, single-family home here. This compares to 15 percent for California and 34 percent for the United States, and is down from 27 percent just 5 years earlier.”
3) Refugees from the Palisades fires are bidding up housing prices in LA since they need a place to live. In contrast, the Alta Dena fire refugees do not have the same deep pockets, and many will sell their lots to developers and move to other neighborhoods.
4) Employee layoffs at the Federal Department of Housing and Urban
Development (HUD) will result in fewer resources to help the LA area’s newly unhoused. According to NPR:
“The Community Planning and Development office at HUD disburses more than $3.6 billion in federal funding for rental assistance, mental health and substance use treatment, and outreach to get those living outside into shelter or housing. It's the "backbone" of local communities' response to homelessness, in blue states and red states alike."
5) Tariffs on Canada, Mexico, and China will increase the cost of building supplies, such as Canadian lumber. As a result, the time and cost of rebuilding homes destroyed in the fires will increase. According to CNBC:
“The new tariffs could increase builder costs anywhere from $7,500 to $10,000 per home, said Rob Dietz, chief economist at the National Association of Home Builders, citing estimates from U.S. homebuilders. Last year the NAHB estimated that every $1,000 increase in the median price of a new home prices out roughly 106,000 potential buyers.”
6) Deporting undocumented immigrants will result in a shortage of construction workers, increasing the cost and slowing down the rebuilding of destroyed and damaged homes. According to a new study from the University of Utah Business School:
“Mass deportation of undocumented immigrants has been touted by the incoming Trump administration as a way to increase jobs for U.S. citizens and reduce housing costs. However, a new study co-authored by a University of Utah business scholar concludes that such a policy would likely backfire because it would drain the construction workforce, significantly slowing an already sluggish rate of new residential construction.”
7) High interest rates will continue because the Federal Reserve Bank uses them to control inflation. Since tariffs increase housing construction costs, the reconstruction of destroyed housing will be slower and more expensive. This, too, will increase homelessness. According to the BUILT website:
“Higher interest rates have completely frozen the owner-occupied residential construction market. Average mortgage rates are at their highest level since 2002, and mortgage applications have fallen to their lowest level since 1997. As a result, new authorizations for single-family units are down 17.3% year over year.”
If even some of these predictions appear, homelessness will increase. Most of these trends have been underway since the presidency of Richard Nixon (1968-1973), and Donald Trump’s cutbacks and layoffs are making them qualitatively worse.
(Dick Platkin ([email protected]) is a retired LA city planner, who reports on local planning issues. He is a board member of United Neighborhoods for Los Angeles (UN4LA). Previous columns are available at the CityWatchLA archives.)
