Monday, July 6, 2015

Smart Growth: Independence from Expensive Housing in LA and OC

Would you like to finally have the freedom to live where you work?

Expensive Urban Life: The Emerson tower offers expanded housing supply in Downtown LA. Because of surging demands and limited downtown competition, rental rate for a single bedroom unit is a whopping $2,500-$3,000 per month. 2 bedrooms about $3,800.

Transit Talking Points by: Nicholas Ventrone, Community Engagement Director
riversidetransit@gmail.com


I hope you all had a safe and Happy Independence Day weekend. Now that the holiday has come to past, we need to discuss an independence topic that every hard working Californian should support.

Over the weekend, I ran across an Associated Press article over the Inland Empire's ongoing problem of long distance commuting.

The issue of long distance commuting in Southern California

The story features an undergraduate counselor who works at UCLA but has to commute a whopping 80 miles to get to work. That nearly doubles my recent 40 mile rush hour field study between South Temecula and Corona. And he's not alone.

The university worker is part of a vanpool with a total of 10 passengers. Regional public transportation options in and out of the West LA area remains very sparse and carpool lane infrastructure for the vanpool HOV is either lacking or is clogged. The Transit Coalition is currently working on fixing those problems. That includes getting the Metro JEM Line built between this area and the San Fernando Valley and supporting the Purple Line extension (a.k.a. Subway towards the sea) from Downtown LA.

The AP piece did mention that by the time the Purple Line gets extended, the UCLA worker would be retired. But given the fact that the West LA-Downtown corridor is heavily and densely populated with both residential and employment hubs, the subway project is badly needed.

However one question remains unanswered:

Why don't people live where they work?

Why doesn't the UCLA counselor and the rest of the vanpool live closer to their jobs at the university? The answer should be pretty obvious.

Take a look at this chart of West LA houses and condos for sale put out by the real estate listing site Zillow:

1842 Greenfield Ave APT 401, Los Angeles, CA
Condo For Sale
$769,000
2 bds • 2 ba • 1,598 sqft • Built 1991

2134 Overland Ave, Los Angeles, CA
House For Sale
$1,039,000
3 bds • 2 ba • 1,608 sqft • 5,401 sqft lot • Built 1928

2107 Overland Ave, Los Angeles, CA
House For Sale
$1,379,000
4 bds • 3 ba • 1,726 sqft • 5,407 sqft lot • Built 1929

10517 Ilona Ave, Los Angeles, CA
House For Sale
$2,649,000
5 bds • 4.5 ba • 4,205 sqft • 6,084 sqft lot • Built 1941

Santa Monica from the Getty Museum (2344684750) Rentals are not much better. According to the Apartment Guide listing website, studios were renting for a whopping $1,580 per month at Centrepointe Apartments. Westwood Village starts from--ready?--$3,600. And HillCreste Apartments start at an overwhelming $2,558 per month for one bedrooms. Single rooms for rent in West LA started at $750 according to EasyRoommate. By the way, the asking $750 figure for a room rental in West LA was actually a lot lower than I thought it was. I predict prospective renters will end up bidding for these units which would result in higher rates.

So if the UCLA counselor wanted to buy or rent directly within the affluent West LA region and if he is raising a family, UCLA would need to pay him a gigantic salary for him to live there because vacant family-friendly housing units are so expensive. I don't think the public at large would support such a salary hike. For the record, the price of the listed $1.3 million 3 bedroom house at Overland Avenue more than doubled from $629,000 in 2002 according to Zillow.

Okay, why don't more people live near where they work?

With West LA out of the question, what about the nearby neighborhoods? 

Across the Sepulveda Pass, into the San Fernando Valley, housing prices are a little bit more affordable. For example, a  4 bedroom, 1 1/2 bathroom 1,660 square foot house built in the 1950's within the central city portion of San Fernando was listed at $429,000. However, rentals are still on the high side. Many 3 bedroom units crossed the $2,000 per month threshold and several studio units surpassed $1,000 monthly.

To the south, forget Orange County. Housing unit costs there are nearly out of control, right up there with the Bay Area. More on that in a moment.

Jefferson Park South
To be fair, South Los Angeles had a pretty good buyer's selection. A family-friendly four bedroom, five bathroom house at a generous 2,784 square feet was listed at $572,900 a short drive or quick transit ride away from several LA job hubs. 3 bedroom rentals ranged from $1,500 to $2,000 per month. Studios were priced at about $750-$800. Single bedrooms were about $800-$1,200 per month.

But, come on!

Is South Central Los Angeles really the safest place to live and raise a family? You make the call.

Generally speaking, housing unit prices are clearly out of control and a short supply of desirable housing combined with lack of robust competition between developers are primarily to blame. As both Los Angeles and Orange County experienced population growth, housing infrastructure has generally failed to keep up. Hardworking families and the working middle classes have to face either overcrowding in small units, housing costs that exceed what they can afford, or long distance commutes. That would more than likely explain why many people commute in daily from the Inland Empire.

Housing infrastructure shortage = skyrocketing costs and few options

The fact is home development infrastructure has not kept up with demand other than here in the Inland Empire, creating supply shortages in Los Angeles, Orange County and San Diego that pushes prices through the roof--pardon the pun.

That's why we had urban sprawl in its worst means in the Inland Empire last decade. The demands for affordable housing units were so great, that home developers came into the Inland Empire cities and built because that's the region that welcomed the expansion. Workers then--and still to this day-- have to travel long distances to/from work. Short supplies and skyrocketing prices in the job-hub areas affect us all whether you believe in urban sprawl or not.

The Orange County Register reported just this last January that the minimum income needed to rent just a two-bedroom apartment in Orange County is a whopping $65,760, according to a report in August by the California Housing Partnership Corp., a low-income housing advocacy and research organization. The group estimates Orange County has a shortage of nearly 102,000 housing units affordable to very low-income households, or those earning half of the median income or less. Other experts predict a shortfall of 30,000 to 60,000 housing units. Many workers are priced out from living where they work...Not good.

Developers need to come back into Orange County and add these 102,000 housing units quickly and efficiently.

No Land Space? Redevelop Existing Infrastructure...

Don't tell me Orange County and LA are out of land space. That's simply no excuse to do nothing.

Yes, undeveloped land space is pretty much a thing of the past for both regions. But that also means that developers need to have a streamlined means to rebuild and transform existing development so that it can better address what the marketplace is demading--better housing the region's workforce. Temecula is already exploring such development for a local corridor even though the region still has plenty of undeveloped land space. Land values there are going up too; that's a prime reason that the City should move forward with the Jefferson Avenue Specific Plan. Keeping housing supplies in line with the demands will keep the unit and rental prices affordable for the workforce as land property values increase.

Infill development needs to be planned properly so to avoid over-densifying the region. Plus, there needs to be an expansion of full-size family-friendly housing condo units too, not just studios and 1-2 bedroom units. The generous square footage of many single family homes can be incorporated into stacked developments too. With the lack of individual backyards, such development needs plenty of private open commons space. That will make urban living more competitive.

Cities in both LA and Orange County need to designate blocks as specific land-use plans ready to go for in-fill home developers so that workers raising families can afford to live there. In Orange County, that could mean allowing retail shopping centers to be transformed into mixed-use hubs. Numerous amounts of valuable land space is being wasted solely for single-story surface parking at these large strip malls. That is a fact.

For example, the Von Karman Plaza located on the northeastern side of the Irvine Business Complex is a giant suburban style retail shopping center with a huge surface parking lot. This job hub is an urban employment center in Orange County complete with office skyscrapers and full service hotels. What government policies are stopping the land owner from redeveloping this area into a robust mixed-use center with additional housing and plenty of open space? With the additional units for rent or for sale, the land owner would make bank from this investment.

I already did the math and calculations. Take a look at this conceptual art piece:

Concept: Placing 1,836 housing units--most family friendly--over an existing suburban retail shopping center in the Irvine Business Complex:


Concept: 1,080 family-friendly condo units at 4,200 square feet each stacked 20 stories high plus three "clones" of LA's Bunker Hill Tower at 32 stories each can bring in 1,836 housing units over an existing retail shopping center in the Irvine Business Complex area.
Note: Concept Only. Not officially proposed.

What I did is took an aerial screenshot of a giant community park in Southwest Riverside County and pasted it to scale over the Von Karman Plaza property. Then, I traced the rectangular area of the full-size basketball court which is about 4,200 square feet and was able to stamp in 54 housing units within the property at that scale. If the developer stacks these units in groups of 8 towers each 20 stories high, Von Karman Plaza can bring in 1,080 family-friendly housing units at 4,200 square feet each with land space to spare. Plus, I was also able to stamp in three "clones" of the Bunker Hill Tower condos from Downtown Los Angeles to scale. The three 32 story towers would bring in an additional 756 units of housing ranging from studios to four bedrooms. This plan would add in 1,836 units of housing to the Irvine Business Complex area, most of which would be family-friendly. The primary market would be Irvine Business Complex area employees.

The ground floor would support expanded retail outlet infrastructure--existing Von Karman Plaza tenants such as Staples, the Habit Burger Grill, Starbucks Coffee and Taco Bell would be given priority placements. The basement level would be 2 stories deep and would offer plenty of customer, resident and guest parking. Retail customers, residents and their guests would pay no fee. General public parking pays the market rate. OCTA and Irvine City bus transit services would be upgraded with potential Bravo! BRT services along the major roads.

Converting OC Strip Malls and Surface Parking Lots into Mixed-use Retail Villages

Concept: Urban Advantage shows how a Walnut Creek BART transit station surface parking lot can be better utilized in high-demand areas with housing units over retail.
From Buena Park to San Clemente, there has to be hundreds of other retail centers and sprawling surface parking lots like Von Karman Plaza built on valuable land space all throughout Orange County that can be utilized to better address the housing shortage problem while preserving the usefullness of the existing retail amenities.

The landowners need to be able to invest in improving the housing supplies. I was able to show that 1,836 housing units can be developed over a single suburban shopping center. Since the California Housing Partnership Corp predicts Orange County has a shortfall of 102,000 units, this pattern can be repeated 56 times throughout the dense job hubs all over the county and the shortfall issue would be solved. The total land value of each of these villages would be worth millions, but plenty of supply would mean that individual condo unit purchase prices and rentals would be competitive and affordable to workers.

Plus, the affordable rentals would not need to be subsidized by the government because supplies would be in balance with demands. Imagine if each 4,200 square foot condo unit sold for only $350,000 or rented for less than $1,500 per month, studios rented for only $750, single bedrooms $900, 2 bedrooms $1,100, and rooms-for-rent $450-$500 in Orange County and LA simply because of better free market competition and better supplies. No rentals would need to be subsidized with the exception of some safety-net cases. How spectacular would that be?

Yes, in order for the developer to profit at those selling prices, the total cost of the 8 family-friendly condo towers cannot exceed $378 million not including the cost of the retail floor level. That will be a challenge. But as manufactured housing technology improves and becomes more efficient, the cost to design and construct the towers would drop considerably as the building "blocks" would be common parts.

The timeframe to build these skyscraper units will be shortened with lower costs and better competition between developers. China has already demonstrated this by erecting a full size 57 story skyscraper in only 19 working days that can withstand a 9.0 earthquake. Most of the construction labor would be done in the factory, but the common parts of the building would be readily available since they would be produced in mass and ready to go. That means changes to government policies combined with this technology means that this shortage problem could get solved within a few months, not several years.

To be fair, there are very few strip malls on large lots in the denser areas of Los Angeles and parcel assembly of the small and expensive existing property may be needed in places like West LA in order develop these family-friendly urban villages. Plus, LA must finally do whatever it can to rid the streets of South Central LA of violent gang crime in order to stir up investments into better housing for the good people living there. South LA's residents should not have to install bars over the windows of their homes. Short-range solution would be to flood the area with strong law enforcement and expand restorative justice, family rebuilding and rehabilitation programs for the long term.

However, it is no question that the local governments cannot allow this housing shortage to continue, especially for workers raising families. Developers need to come in and expand the infrastructure. Expensive and crowded housing weakens the local economy, making it harder to attract new businesses, spark retail investments and harder for existing businesses to recruit qualified workers. That could explain why the Inland Empire economy is improving a rates better than LA and Orange County. That's because homes are affordable here. And they need to stay affordable and competitive as the medical, logistics, manufacturing, and procurement sectors invest in jobs.

The time is now to get this situation under control instead of it controlling us. We must finally declare our freedom and independence from high housing prices.


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