By Emily Frisan, Nov. 23, 2021
Southern California is predicted to face rent increases due to large-scale migration from cities to suburbs, according to an economic report published this month by USC’s Lusk Center for Real Estate. The forecast predicts monthly rent in Los Angeles County to increase by $252, $410 in Orange County and $348 in San Diego County.
The report attributed these increases to vacancies in multiple markets which predict lower rent growth in the next period. Top reasons for the jump in rent are the relocation of businesses, population loss, low mortgage rates and various eviction moratoria from all levels of government.
“A lot of us know we need to build a lot more housing, but we haven’t found a way to motivate cities to do that yet,” said Anthony Orlando, an assistant professor for the Department of Finance, Real Estate and Law.
In Los Angeles County, the average home costs nine to 10 times more than the average income.
As workers begin to transition to work from home, residents are beginning to move outwards of central business districts, such as downtown Los Angeles.
The report attributes business shutdowns due to an unwillingness to pay premium rent as a top reason for the large-scale tenant migration from cities to suburbs.
Orlando believes there is a possibility the trend may fluctuate as vacancy rates in central business districts regain popularity. As rents sharply increase, the tipping point of rent crises build for many years until the public notices.
Suburban areas, such as the neighborhoods surrounding Cal Poly Pomona, make it increasingly difficult for students to find temporary housing during the academic year due to newly permanent residents who have migrated from downtown areas.
Low mortgage rates fell from 4% to 2.5% in March 2020, which made home owning in the suburbs appealing relative to renting in the city. Since then, the report states suburban and central city apartments were competing with the owner-occupied housing market.
To pay a higher rent means less pay for other essential basic needs.
The predicted increases come as every submarket in Los Angeles and the Inland Empire has 44% or more of tenants who spend more than 30% of household income on rent.
Andre Mai, a civil engineering student, and his roommates pay a total of $3,800 for a four-bedroom house seven minutes from Cal Poly Pomona. Mai individually pays $850 plus utilities for offampus housing.
“There was a point where we were getting really desperate, I thought we weren’t going to find housing for a while. I just kept on searching and luckily we called the property manager for the house we have now. It was all that was available,” Mai said.
Over the past 30 years, Southern California has made it increasingly hard to build housing due to the topography, government regulations and the density of buildings and population.
Creating more housing units leads to a change in community and people want to solve the problem — but not in their own neighborhood, according to Orlando. Often associated with the term not in my backyard, NIMBYism takes local government issues, such as lack of housing, to the state legislature.
“These people aren’t willing to make the sacrifices to fix it. When you own a house it’s not your problem to fix. You’re set in,” said Orlando. “It’s a moral obligation but not everyone feels that way.”
Brady Collins, an assistant professor in the Department of Political Science, explained housing crises are regional, yet there is only a limited amount of oversight a city can regulate until the private sector becomes involved. Businesses decide what and how many units to build while the local government determines where and the policies.
“It’s a complicated problem. There is a lot that, for example, the City of LA could do but they’re not currently doing,” Collins said. “But it takes the state government getting involved and arguably the federal government should be doing what it can to distribute more funding to the 50 states and municipalities in order to help address the housing crisis. It takes a lot of different stakeholders to make an impact.”
Units for rent are not stabilized, therefore residents are more vulnerable to housing crises and susceptible to effects of increased inequality. Families who are rent burdened are not able to afford basic needs such as food, transportation and healthcare.
Collins explained how COVID-19 has created unique and acute problems for housing crises. An eviction moratorium policy was put in place for residents in Los Angeles County who still owe back rent as they faced economic insecurity. As the tenant protection is about to expire, many residents are predicted to be pushed into homelessness.
Brian Lee, a computer science student, has lived in Koreatown with his mother and noticed the increase of rent over the past seven years. Since moving to off-campus housing, Lee has been aware of housing insecurities located in high-traffic Los Angeles business districts.
“It’s been a gradual increase,” said Lee. “They just send a notice. When I was living there it raised $100 to $200 more during COVID.”
Measure JJJ in Los Angeles was put in place in 2016 for private businesses owners to build infrastructure for populations close to public transit. But, according to experts, lack of affordable housing is still critical to address housing insecurity and could create an eviction crisis. New construction in areas of business tend to be expensive units of luxury, which most renters cannot afford.
“We need more, and we need more diversity in the geography,” said Collins. “We need more housing not just built in downtown LA, but in the wealthier and traditionally exclusion areas and neighborhoods that have historically tried to prevent housing constructions in their communities.”
Feature image by Sharon Wu
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