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Fri, Jun

LA's Housing Shortage Myth Exposed

VOICES

THE VIEW FROM HERE - The Big Lie about Los Angeles’ having a housing shortage “has been aided and abetted by a finely tuned False Housing Crisis Narrative, which includes both a false problem and a false solution.”   May, 19, 2023, The Marin Post, Voice of the Community, Power Players’ Problematic Playbook For Housing, by Sharon Rushton. The Marin Post in Northern California recognizes the lie because it is a wide spread one affecting not only Los Angeles, but all of California.  To a considerable extent, the fraud of Smart Planning has devastated cities throughout the world including Australia, Canada, Great Britain and the United States.  

One aspect which the Marin Post does not mention in its article, but which it may have covered elsewhere, is the povertization of the entire population as Wall Street moves us from an ownership society to a nation of renters where wealth accumulates with the 1%.  Not only are the newer generations denied access to the lower end of the ownership market, but the middle class is being financially raped. 

Homeownership Creates Wealth 

The main way American families accumulate wealth is through homeownership.  After thirty years, the typical family used to own its own home whereupon it stopped making monthly mortgage payments.  More importantly, they had equity in their home.  If it was worth $250,000, that was their money. They made their mortgage payments all those years so that at the end, they would own a major asset and be secure in old age. When rampant inflation in property taxes threatened to force the elderly out of their homes, California passed Prop 13 – the best legislation for homeowners since the GI Bill.  Inflation benefitted homeowners.  Their mortgage payments stayed the same (unless they were conned into a variable rate mortgage), while their income increased and the home’s value of the home increased. Rents always increases to keep up with inflation, but mortgage payments stay the same.  Thus, homeowners are in effect paying less each month in real dollars for housing.  Also, if interest rates drop, a homeowner can refinance and pay even less per month for housing, while his equity steadily mounts. 

Those Americans, who did not buy when they were 25 years old reach 55 years of age, have zero equity.  Their fortune in rent payments is gone forever. In addition, as inflation raised prices, landlords increased the rents. After retirement, their rent increases continue. There is no Prop 13 for renters.  The longer renters live, the more likely they will be homeless. 

LA’s Attack on Homeowners 

Los Angeles’ low homeownership rate shows that Wall Street uses densification to force people out of homes and into rental units. “Among the state’s largest cities (those with at least 100,000 housing units), homeownership rates range from 37% in Los Angeles to 59% in Bakersfield.”    June 14, 2022 Public Policy Institute of California, Homeownership Trends in California.  In 2020, Los Angeles density is 8,304.2 ppl per square mile; Bakersfield’s density was  2,693.7 ppl per square mile.  As density increases, the cost of a home increases and building more homes in a dense area always increases the cost of housing. As housing costs rise, young people are excluded from the housing market.  

Let’s Look at One Real Example 

The biggest hurdle to buying a home is the 20% down payment. A 3 bedroom 3 bath home north of Franklin Ave at 1907 Confidential Drive should cost about $450,000, requiring a $90,000 down payment. (This is a real case. Using inflation alone without increasing its value for upgrades, the 2,023 sq ft house, constructed in 1919, should be worth about $164,191.31.  All dollar figures are 2023 dollars).  

A $90K down payment would be a hefty, but it is possible for a huge section of Millennials, especially, if they had started a few years earlier with a very modest home at $150,000.  Thus, they could transfer that equity tax free as part of the down payment on the new home.  

After more than two decades of real estate corruption under Garcettism, that same house costs $1,955,000.00 ($1.95M! Yes, it is overpriced by $1.5 M).  The down payment is $391,000.00; that is a $300,000 penalty due to LA’s corruption. A 30 year fixed mortgage at 6.43 % is $10,973 per month.  What Millennial can afford $11K a month mortgage? 

This real case reflects the impact of city hall corruption due to the criminal vote trading system.  Whatever deceit, trickery or corrupt business practices developers want to employ is OK with City Hall.  While the economic principle is that density kills homeownership, people do not grasp what is happening. Demand is not raising prices. Demand has been dropping for years and developers knew it.  Hence, Los Angeles Big Lie #1 that we have a housing shortage.  That’s a better selling point than “We want to financial rape Angelenos.” 

Millennials have been leaving Los Angeles for years and the percent of foreign immigrants has been decreasing. The professional liars at City constantly declared that Los Angeles had broken the 4 Million persons mark and we had to build more housing. The reality was that the Baby Boomer Death rate was low which keep the population up; births added to the population but did not increase housing demand. Homelessness became a crisis for one reason. The city was destroying poor people’s homes and forcing them onto the streets.  Then fancy high density apartments took their place which greatly increased housing costs.  While Millennials were still young and followed the Dorm Room life style, they could double and triple up to pay high rents, but when they became Family Millennials, they moved out of LA.  It was not only Whites who were leaving LA. Hispanics and Blacks were moved to the Inland Empire and to Antelope Valley or out of state altogether.  The flight of the home buyers has been underway for a decade. Disaster has already befallen LA, but these lunatics believe that it they can turn 100% of Angelenos renters, then everything will come up roses. 

While the homeless are the most visible product of corruption, all LA families, except the super rich who can buy a $200 Million 40,000 sq ft mansion in Malibu, have the same choice: Stay in LA and remain poor forever vs move away and provide a decent life for your family. 

(Richard Lee Abrams has been an attorney, a Realtor and community relations consultant as well as a CityWatch contributor.  You may email him at [email protected].