Monday, January 9, 2017

More evidence Californians are overpaying for housing - Part VI

ABC 7's Vista LA brings the community gentrification issue of expensive homes into the media spotlight.


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


Southland residents who were watching TV Saturday night and tuned into Chanel 7 got another taste of what overpriced housing can do to existing communities: Gentrification.

Gentrification was defined on the Vista LA show and the dictionary as the displacement of poorer residents as the affluent and middle class take over. However, from what I observed in this entire story of the expensive housing crisis, it's actually the working middle class that often gets displaced out of town while the poor are displaced into cramped living conditions or on the street. In fact, there have been cases where entire cultures have been driven out.

Irvine is one example. Through the 70's and 80's this affluent city housed LA's office workers who commuted daily via the I-5 and the Marines and their staff stationed at the former Tustin and El Toro bases. The region was also flush with orange groves. Though the military jobs evaporated with the base closures in the 90's and the citrus farms being developed, the growth of OC's economic job hub of the Irvine Business Complex kept the region economically alive. However, the continued population growth and lack of residential housing brought the purchase price of regular tract housing to $750,000 or more with single bedroom rentals in excess of over $2,000 per month which had displaced many of these workers into the Inland Empire. To be fair, infill residential development is rapidly taking place in Irvine but still not fast enough in other areas of Orange County.

All one has to do is ask the hundreds of thousands of commuters that work in Irvine or other areas of Orange County and commute in via the 91 Freeway of why they don't live where they work. They will correctly tell you it's too expensive.

According to the Vista LA news story, developers have recently been looking into investing in areas like Boyle Heights and South Los Angeles. Both of these regions have rich cultures and house the region's working class families, most of whom work in the service sector. Because of high housing demands and low supply, land owners have been able to raise rents annually by substantial margins which results in economic pressure on these working families because salaries have generally remained stagnant. According to the report, some families faced rent hikes upwards of $500 per month or 25% in a single year; chances are their income to pay for such hikes didn't reflect that. As a result, these people are priced out and forced to leave. Thus, the cultures and demographics at both of these LA suburbs are in trouble.

Venice and West LA went through this phase a few decades ago as wealthy investors and actors bought up the property but regulatory rules prevented developers from expanding the housing supply to meet the new demands which too resulted in the displacement of the working class families in this area. To be fair, infill smart growth was still maturing back then, but out-of-control pricing still remains in 2017.

LA Mayor Eric Garcetti understands the issue and knows that LA needs a growth in housing supply. In addition, he supports informing residents of their tenant rights and enforcing the Ellis Act law to better protect residents living in leased units, especially subsidized housing.

This issue has now crept its way into the Inland Empire. Corona and the Temecula Valley have become expensive with the remaining affordable areas like Menifee, Hemet, Lake Elsinore and other towns along the SR-74 corridor threatened. To say we are at a crisis point is an understatement.

There is no question that high demands for housing and low supply are the cause of this entire issue. In fact, go to South LA, check out the population density, and look at the housing infrastructure. Then, take a stroll through Old Town Temecula. You'll find that the former is way more populated; the latter is more developed but with far less people living there. The hourly bus service frequency of local RTA Routes 24 and 79 should speak of that. Compare that with the numerous LA Metro bus routes and the Metro Rail Blue Line that run through South Central every 15 minutes or better.

I will say once again that the state government needs to pass a variation of Governor Brown's proposed Smarter Smart Growth Law; policy that will streamline the regulatory process for infill residential development that meets local zoning rules so that housing demands can be met and market unit prices and rentals can become affordable for the working class. For example, the proposed 1,000 housing unit arm of the Sears Mail Order Building renovating project in LA deserves expedited processing simply because it is infill. The investor should have been cleared to develop those units years ago.

Regulatory reform at the state level is the key to encourage the development industry to better compete and develop the infill housing necessary to expand supply. That will allow inventory to finally meet market demands in the Golden State and I believe that this is the answer to reverse cultural displacement and gentrification because market rents and purchase units will once again be competitive and affordable. South LA can one day become a paradise with first-rate housing infrastructure that existing residents can partake in.

In fact, a reverse term for gentrification has been coined and is floating around in this debate: "Gentefication" which means the people moving back and investing themselves into the community and protecting the historic culture and demographics of the area.

We need to encourage this new "gentefication" and pass the Smarter Smart Growth Law to fight gentrification, and expanding market housing supply and inventory for the working middle class is the answer. The governments need to get rid of all of the unnecessary red tape that stands in the way and finally solve this problem.

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