Friday, January 29, 2016

More evidence Californians are overpaying for housing - Part II

How Dallas and Chicago compare to the Southern California rental market

Dallas, Texas-02

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


Our multi-part series on why SoCal's have to face soaring rentals and mortgage payments in order to live continues. Earlier this month, I've showed how Phoenix, Las Vegas and Salt Lake City all offer non-subsidized affordable units for their workforces which pretty much embarrasses Southern California's high price crisis. On the other had, Portland has an expensive housing issue but has its own mini-Inland Empire with reasonably priced rentals about 10-15 miles east of downtown connected by robust transit options. Part I of the analysis is posted on this blog.

Today, we'll take a look at the rental markets in Dallas and Chicago, two major city hubs with polarizing political demographics. We'll see if one with a $50,000 per year salary can afford a 3 bedroom rental near the downtown areas as the sole household provider. Again, the rent budget adds up to about $1,250 per month.

Living in Dallas/Fort Worth

Only five minutes into my research into the Big D, I came across the Residences at Lake Highlands, an upscale complex complete with a clubhouse, playground, pools and private commons. The interior renovations alone show that these luxuriate 3-bedroom units would rent for at least $3,000 monthly if it was built near West LA or the Irvine Business Complex. Add to that, the neighborhood is next to local shopping and walking distance to the Lake Highlands DART station. Train ride into Downtown Dallas is about 25 minutes with departures approximately every 20 minutes.

But the Dallas luxuries don't come with the high rents. Single bedroom units start at this urban country club at...ready? Only $650 per month. The 3 bedroom, 2 bath residence rents at just $1,190 per month. That's about half of what many in the Inland Empire pay for their rent and about a third of Orange County prices.

The minimum wage in the Lone Star State is $7.25; so Lake Highlands may be a little high for the entry-level worker. In fact, many of the studio and single bedroom rentals in Dallas were in the $600 range, pricing out such workers with 51% their gross income going to the rent. Keep in mind though that Texas has one of the most business-friendly and low taxation regulations in the country. That means hard-working employees have plenty of opportunities to work their way up with the competitive job market. And this minor inflation is nothing compared to what Californians are paying for studios. Also, the neighboring Fort Worth area also had better competition with some units in the $450 threshold. Looks like the Big D could use a few more studio lofts and singles but the family-friendly rental market looks great.

Life in Chicago

Our next stop takes us to the Windy City. If you track the local news there, you well know that both south and west Chicago are havens of gang violence and homicides, right up there with South Los Angeles in the 1990's. The criminal group Gangster Disciples controls the south side with the western end controlled by the Almighty Vice Lord Nation gang. Membership in each is in the tens of thousands, mostly African American boys. Yes, it's that bad.

With that said, any unit south or west of Downtown, is out of the discussion. East of the central hub is Lake Michigan, leaving only the northern end and outer suburbs as the only desirable options to call home. With this grave distortion of the housing market, I expected the north side to be overpriced like Southern California simply because of the horror and evil that has taken over the rest of the inner city. That pretty much wipes out a chunk of the supply from the market. I mean, why would a hardworking family want to move into a suburb that is plagued by violent gang crime? If I got a $100,000 per year job offer in the Windy City and if I was raising kids, I would not want them anywhere near the Gangster Disciples or the Lord Nation gangs, period.

So, just how bad is the northern portion of the Windy City in terms of rent? Actually, it's not nearly as bad as I thought. Three minutes into my research of north Chicago rentals, I found several older 3-bedroom apartment listings on Zillow from $1,000-$1,200 per month. The living space is a bit small though at about 1,000 square feet and most rentals only offered a single bathroom. As one got closer to downtown, the newer urban high-rise units began to look like Southern California with market rentals creeping into the $3,000-$4,000 territory. But at least the smaller units within the inner city are there with the $1,000-$1,200 per month marketplace rentals. Thus, the options are at least there. Studios and singles are right on par with Dallas at $500-$600 per month but the mininum wage of $10.05 an hour permits affordability.

Thus, the distortion due to the violence was not as bad as I thought it would be. But the outer suburb rental market was interesting. Chicago does have a robust regional rail system which would allow efficient connections between the metropolitan edges and the urban core. For example, during the week, the Metra Union Pacific Northwest line has trains running every few minutes during rush hours and approxiately every 60 minutes at other times. Many of the rental prices are just few hundred dollars lower than the Inland Empire with single bedrooms starting at around $900 and 3 bedrooms at $1,600. So the distortion caused by the gang crimes has pushed up demands in the outer regions. For the record, studios in the gang-plagued areas of Chicago were starting at around $450; 3-bedroom around $800.

Chicago has got to get better local policing, state law enforcement officers and the National Guard in to isolate and stop the violence there and put the gangs and illegal drug sales out of business once and for all. Unless that happens, the evil violence that has plagued the African American neighborhoods will continue. I believe the continued omission and neglect to solve this deadly crisis in these minority Chicago communities is absolutely racist. Southwest Riverside County for example has one of the strongest law enforcement presences where even petty offenses such as speeding, red light running, driving drunk and even begging at a 15 freeway offramp are closely watched and enforced. Everybody regardless of skin color enjoys the strong protection. Gangster Disciples would flee Southwest knowing their crimes would be caught in an eye blink. Lord Nations would think twice before any committing acts of vandalism anywhere near Old Town Temecula.

Stronger local, state and federal officers should have been in Chicago years ago to protect all of the innocent people there regardless of their skin color from the growing violent crimes. Factoring out race, the homicide and shooting stats confirm stronger law enforcement needs to be called in, period. But for some reason, these African American communities have been neglected of the necessary police resources that Southwest Riverside County and most other jurisdictions enjoy every day, and the major civil rights advocacy groups have been mostly silent about that. I stand by my case that this is racism.

The national news media also needs to do a better job at reporting the Chicago homicides and gang violence in general. And perhaps the horrifying stats may have done this. For January 2016 alone, 51 people have been murdered in the Windy City. Just yesterday, several more shootings occurred in the South and West sides that injured two 17-year old boys and three men. Did you hear anything about that specific shooting?

On the restorative justice front, the hardworking non-profit organizations must be allowed to operate at their best to restore the family units and mentor troubled youth. Such programs need to be allowed to expand.

But this type of distortion of the market has also contributed to overall high rentals in Southern California. Such displacement has driven buyers away from neighborhoods in South LA, San Bernardino, Moreno Valley and parts of Riverside which drives up demands and prices elsewhere. Of course, the primary reasons to clean up the inner cities should be to protect innocent lives and improve public safety. No question about that. But a secondary outcome would also be a stabilized housing market and better affordability near the inner city job hubs. People should be able to live near their jobs without having to worry about being shot.

Be sure to check in next week as we'll cover San Antonio, Philadelphia and New York.

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