While much attention has been paid to the city's housing crisis, too little attention has been given to the barriers that block the solutions to the crisis.
The dimensions of the crisis are clear. According to a recent report by the Southern California Assn. of Governments, citywide demand for affordable housing is about 3,700 units per year. However, in any given year only about one-quarter of this number will be produced. For example, only $32 million was allocated in the city of Los Angeles in 2000 to build or rehabilitate affordable housing. Although this represents the largest single-year allocation in city history and may seem like a lot of money, it will produce about 1,280 units, only slightly more than one-third of the number required annually. On average, the yearly allocation is closer to $20 million, which results in about one apartment being built or rehabilitated for every four needed.
The principal causes of the crisis--population growth and high land costs--show no signs of diminishing. According to experts at the UCLA Anderson School, increases in population in Los Angeles County will continue, fueled by migration from other states and foreign countries, as well as increasing births from the echo effect of the baby boom, as boomers become grandparents. This growth is largely Hispanic and much of it is in the San Fernando Valley. Homeownership will remain too expensive, and renting will be the only viable option for most of these growing families.
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Further, rents have increased significantly in recent years, outpacing the earning capacity of many. The result is severe overcrowding, with families doubling or even tripling up in studio and one-bedroom apartments, converted garages and even trailers to keep a roof over their children's heads. With the UCLA Real Estate Center predicting high single--or even low double-digit annual rent increases in the years ahead, the housing crisis will only deepen.
Some suggest that the free market will respond and provide the needed housing. This is unlikely. For-profit developers of multifamily housing cannot turn a profit on the larger units needed by many poor families. These projects simply do not "pencil" without government financing to bridge the gap between high land costs and the low rents these families can afford.
