LA has a housing crisis – but the problem isn't those fancy new towers

2016-05-17T14:11:00-04:00

What’s the root cause of Los Angeles’ affordable housing crisis? Many blame the new luxury housing developments springing up... driving up interest in the neighborhood and attracting hipsters. Landlords take notice and soon rents start climbing. That’s the story anyway. But here’s the thing: If booming development in hot markets like Hollywood and downtown is why rents keep going up... why have the same price increases hit locales with extremely limited development?

"Because our problems aren’t driven by a local phenomenon but by a regional one: low residential vacancy rates. Nothing is more important, and data from the American Community Survey confirm this. Zooming out to look at the 20 largest U.S. cities rather than local ZIP codes, the correlation between prices and vacancies is four times stronger than the correlation between prices and new development."

According to experts, 5% vacancy is the magic number defining the landlord-renter relationship. Above it, the landlord is forced to lower rents or offer incentives to attract renters. Below it, expect to pay exorbitant rates for that roach-infested closet.

So in other words, it's a paucity of housing stock in general driving the city's housing crisis, rather than a few flashy towers.

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LA has a housing crisis – but the problem isn't those fancy new towers