When it comes to affordable housing, Los Angeles has a serious problem. L.A.’s housing market is the second least affordable in the nation—behind only to San Francisco. Middle-class families can only afford 23 percent of homes for sale in L.A., according to one measure. And the picture isn’t much better for renters. More than 58 percent of Angelenos spend more than the recommended 30 percent of their income on rent—and nearly 33 percent fork over half their monthly earnings to their landlords.
In advance of the Zócalo event “Can Anyone Afford to Live in L.A. Anymore?”, we asked housing experts from across the U.S.: What city or cities have the most to teach L.A. about dealing with Southern California’s current housing affordability crisis?
No city has quite the same needs and housing challenges as Los Angeles. But several of L.A.’s West Coast neighbors have latched on to a promising tool to address local workforce housing needs that may serve as a model.
Building more housing can help drive down housing prices over the long term, but without sufficient funds to support below-market rate housing, many in the Los Angeles workforce will continue to struggle to find decent, safe, affordable homes. This includes childcare workers, preschool teachers, restaurant employees, and health aides.
Recognizing the importance of affordable housing to the health of their local economies, Seattle, San Diego, Santa Monica, and San Francisco engage employers in providing financial support for workforce housing. Each city requires developers of new commercial, industrial, or retail properties to pay a “linkage fee” to help meet the need for workforce housing created by the addition of new jobs. These fees are usually charged on a per-square foot basis and deposited into a housing trust fund, which are usually operated by nonprofit housing developers and support the construction or rehabilitation of high-quality, low-cost housing designed to stay affordable over the long term.
In each of these cities, linkage fees have generated millions of dollars in much-needed revenue to create affordable homes. By establishing a direct connection between new jobs and the need for new homes, these fees help to make it possible for families to live in the communities where they work, which also helps reduce traffic congestion from long commutes. For more information about commercial linkage fees and other effective local housing policies, see the Center for Housing Policy’s online toolkit.
Robert Hickey is a senior research associate with the Center for Housing Policy, the research division of the National Housing Conference, based in Washington, D.C. He is the author of several reports on strategies for creating inclusive, affordable cities and suburbs, including the newly released “Inclusionary Upzoning.”
By one recent estimate, Los Angeles is 500,000 units short of affordable dwellings. The problem is not limited to low-income housing—there is short supply and high demand for affordable mid-priced housing, too. This imbalance in supply and demand results in upward pressure on home prices, causing a demographic shift toward lower-priced neighborhoods to the east and south, which leads to more upward pressure on prices for residents of those neighborhoods. They are then forced to look farther out for housing, or to settle for substandard and overcrowded conditions in their home neighborhood. There have been successive waves of these demographic shifts in L.A. over the last 35 years. The Great Recession slowed it down, but it is back now with a big head of steam.
In several cities in Germany, a fledgling movement aims to address the impacts of high land prices, high density, and high development costs on urban dwellers. First conceived in Freiburg in 1993 as a model for building that would take energy consumption and social needs into account, the Vauban experiment of Building Groups, or Baugruppen, brought architects, city planners, and owners together—leaving out the developers and their profits—to redevelop surplus military land with economical, eco-friendly, human-scale multi-family buildings. The Baugruppen idea has spread from Freiburg to Tübingen, Berlin, and other German cities, as well as to a few other European countries.
The Baugruppen concept is an intriguing solution to the problem of poorly conceived, developer-driven, expensive multi-family housing. Building on small successes and experience, the Baugruppen model could be scaled up to make a real difference in mid-level affordability, decrease gentrification pressures, and improve the health of our neighborhoods.
Joseph Lightfoot is a realtor and assistant manager at the Sotheby’s Realty Los Feliz brokerage. He has been involved in residential construction and real estate in Los Angeles since 1978.
A. Mechele Dickerson
Austin, where developers can build taller—if they provide on-site affordable housing
Austin and Los Angeles have a lot in common, like beautiful weather and a great music scene. They also have a not-so-great thing in common: unaffordable housing.
From 2000 to 2010, Austin’s population grew by 20 percent. Over the last four years, new multi-family units have sprung up across the city. Lured here by Austin’s burgeoning high-tech industry, new residents (often Californians) generally earn higher-than-average incomes. Housing affordability isn’t much of a problem for them, but it is increasingly hard for middle-class Austinites to buy or rent homes.
High housing costs are pushing many Austin residents to the suburbs. Suburban housing, while cheaper, is no panacea. Living outside of Austin but working in the city often requires a nightmarish commute, especially given limited public transportation. While L.A. may have the worst traffic in the country, Austin—recently ranked the fourth worst city for traffic jams—isn’t far behind.
Austin has made efforts to combat the problem, such as a program that allows downtown developers to increase a building’s height and density if they provide “community benefits.” These benefits include providing on-site affordable housing in the development or paying fees to a housing trust fund. In addition, Austin voters recently passed a $65 million affordable housing bond.
With an almost 95 percent housing occupancy rate, Austin still has a long way to go to provide enough affordable housing. But L.A. can follow Austin’s lead by linking new (and high-end) development projects to affordable housing and finding other ways to make urban living more affordable to residents from all income groups.
A. Mechele Dickerson is the Arthur L. Moller chair in bankruptcy law and practice at the University of Texas at Austin School of Law and author of Homeownership and America’s Financial Underclass: Flawed Premises, Broken Promises, New Prescriptions (2014).
New York, Seattle, Portland, Washington, D.C., and London all have strategies worth incorporating
There is no silver bullet to solve the severe shortage of affordable housing in Los Angeles and Southern California. But successful approaches to the problem are being deployed across the U.S. that can serve as models. A multi-faceted strategy incorporating the following could make a difference in L.A.:
1) Set an ambitious, long-term plan that uses all available tools like land-use policy, zoning, and subsidies. New York City, for example, recently announced plans to build and preserve 200,000 affordable housing units in the next decade. The plan calls for the city to build smarter by aligning tax incentives and zoning polices to ensure greater impact.
2) Establish a funding source dedicated to affordable housing. Reliable and dedicated sources of affordable housing funds help to create a local industry and the capacity to address the problem year after year. In 1981, Seattle voters established a special fund for construction and rehabilitation of housing for low- and moderate-income families. Sixty-six percent of Seattle voters supported the most recent renewal of the fund in 2009.
3) Explore non-traditional approaches to affordable housing and ensure existing laws and regulations don’t inhibit innovation. State and local legislatures across the U.S. are reconsidering zoning and other restrictions to prevent factory-built, manufactured homes from being installed in cities. In Portland, Oregon, 200-square-foot homes renting for as little as $250 per month may soon provide housing for minimum-wage workers. And cities like Washington, D.C. and London are turning shipping containers into studio apartments.
Local leaders who want to address the affordable housing crisis must have the wisdom to fully embrace what works and the courage to question long-held orthodoxies that now stand in the way of progress.
Ben Hecht is president and CEO of Living Cities, an organization that harnesses the resources and knowledge of its 22 member foundations and financial institutions to benefit low-income people and the cities where they live.