L.A.’s reality: More people want to live here than there are homes being built

Along many Los Angeles thoroughfares, large apartment complexes are replacing parking lots, strip malls and warehouses, as builders provide new homes in a city grappling with a persistent housing shortage.

In downtown, dozens of mixed-use condo and apartment towers are rising in the largest development boom since the 1920s. Other prominent neighborhoods, including Hollywood and Koreatown, are awash in residential construction.

This decade the city, in fact, will easily surpass the number of new homes built in the 1990s and possibly even during the 2000s with its housing bubble — gains that have caused a backlash and spurred Measure S, an initiative on next week’s municipal ballot that would halt developments that receive certain zoning exemptions.

But to many housing experts, the development wave isn’t a wave, but rather a ripple.

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That’s because the city and region have long built too few homes for all the people who live, or want to live here, they say. And due to a recent surge in population, the city of Los Angeles this decade has been adding housing, relative to resident growth, at the lowest rate in at least 40 years, state records show.

“We are so far behind,” said Shane Phillips, policy director with the advocacy group Abundant Housing L.A., which is opposing Measure S.

The region’s booming economy is exacerbating the problem.

From 2010 to 2015, L.A. added 157,900 new jobs and 236,318 residents — greater than the population gains seen in the 1990s or 2000s. In 2015 alone, Los Angeles experienced the largest annual percentage growth in population of any major California city and surpassed 4 million residents.

The number of homes added didn’t keep up: 40,014 units from 2010 to 2015 — or one new home for about every 5.9 new residents.

Jordan Levine, an economist with the California Assn. of Realtors, said that if an area doesn’t want housing costs to soar, it should roughly build inline with its current average household size.

That size has increased over the last 40 or so years in Los Angeles, but still remains fewer than three per household, according to data from the state Department of Finance.

That means housing production in Los Angeles has not kept up. Between 1975 and 2015, one new housing unit was constructed for every 3.7 new residents, the data show.

During most of that period, housing production sharply lagged relative to population growth. The exception was in the 2000s, when one unit was constructed for every 1.5 new residents as construction jumped and the city, in some years, lost residents.

Demographic experts said the gains in population this decade probably came from births and, to a lesser extent, immigration.

The population of 25-to-34-year-olds has also grown more than other age groups, said Dowell Myers, professor of policy, planning and demography at USC.

“Baby boomers are holding on to the housing they already have and not giving it up. And these new people are coming in [to the housing market] and there is not enough housing units.”

Brian Uhler, principal fiscal and policy analyst with the nonpartisan state Legislative Analyst’s Office, recently co-authored a report that found from 1980 to 2010, L.A. County needed to build three times the number of homes than it did to have stopped rent and home prices from significantly outpacing the rest of the country.

For the city of L.A., that rate was probably even higher. “The problem definition is simple,” he said. “There are more people who want to live in L.A. than housing that gets built.”

That’s not to say there isn’t substantial construction, and it may be more noticeable as developers target property in older neighborhoods, rather than undeveloped land in the city’s outskirts.

In some neighborhoods with a flood of new buildings, the supply is starting to affect rents, at least at the high end of the market. In downtown and Koreatown, some landlords of new complexes are offering move-in incentives such as a month’s free rent.

Century West Partners, for example, is paying renters $1,500, in addition to a month free on some units at its new Koreatown complex K2LA, where a one-bedroom starts at just over $2,000 a month.

Citywide, the median apartment rent for all units was $2,483 in January. Although that was up 5.6% from a year earlier, according to real estate firm Zillow, it’s less than the double-digit increases seen for most of 2015.

And even more housing is on the way.

Over the last two years, the city’s Department of Building and Safety has approved tens of thousands of additional units, giving the city a decent shot at surpassing last decade’s housing construction.

But much of the building has been confined to a limited number of central neighborhoods and total production is far below the 1970s or 1980s, when more than 100,000 homes were built in each decade, according to state and census data.

That’s partly because fewer units can easily be built, said University of Calgary professor Greg Morrow, whose UCLA doctoral dissertation covered the history of Los Angeles zoning.

Amid concerns over traffic congestion and other environmental issues, the city and voters over the years slashed the number of homes that could be built without special approvals — a time consuming process that involves public hearings and offers a prime target for lawsuits.

In 1960, Los Angeles’ planning rules would have allowed for a population of 10 million, according to Morrow’s research. By 2012, the city had reduced “residential capacity” to 4.3 million people.

“You can downsize all you want,” Morrow said. “It doesn’t stop people from having kids and we don’t have a wall around the city, so people will come.”

Voters next week could make it even harder to build more than current rules allow.

Measure S would place a two-year moratorium on zone changes or height district changes, while permanently barring, for individual projects, general plan amendments, which are typically needed for a land use change such as building homes in a manufacturing district.

A recent Times analysis found Measure S would stop the kinds of projects that tend to add lots of new units, but require few demolitions of older homes.

In 2015 alone, developers asked to build more than 8,000 units through general plan amendments, zone changes or height district changes, city records show. If those were all approved, fewer than 150 rent controlled units would be demolished.

But stopping exemptions is a good thing, according to Measure S proponents, who say the projects that receive them are too often out-of-scale luxury developments that don’t soften rents in older buildings nearby, but instead fuel gentrification, while grid-locking traffic.

“We are talking about wholesale evaporation and gentrification of communities,” said Damien Goodmon, deputy campaign manager for the Yes on S campaign.

Or the opposite could happen as older, less desirable housing units are left vacant. Consider Normandie Avenue in Koreatown.

Logan Alexander, who manages a 1930s building there, said new complexes nearby are limiting his ability to lift rents.

When a tenant moved out last fall who was paying $1,450 for a one-bedroom unit, Alexander said he tried to get $1,575, then $1,525. He’s now seeking $1,495, just above what the previous tenant was paying.

“I’ve lost some tenants to new buildings,” he said. “Units are sitting vacant for a longer time.”

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