Any SoCal Resident Can Tell You Rent is High,
But did you know the average cost of a home in Los Angeles ($658,000) is more than double the national average for houses of the same size? Real estate experts say that the gap between the cost of living in LA and the rest of the country will continue to get larger, all the way through 2018. When gainfully employed, educated people with salaries hovering around $250,000 a year are looking to move to nearby cities due to the inability to find a home within their budget that meets their standard of living, it is clear that California is pricing out its own residents. And the truth is – there isn’t really much anyone can do about it.
While no single problem is exclusively to blame for the incredibly inflamed housing cost in Los Angeles, the generalized answer is that there are not enough houses to meet the demand, and in addition to that, the cost to build more housing keeps developers away. It is a vicious cycle of economics – people want housing, construction companies can’t fill that demand because the cost to them is too high, this takes money and jobs out of the metropolitan area as builders, investors, and developers look to the suburbs to build, so the demand grows, and the cost grows alongside it.
What is even more unexpected, is that the positive growth in jobs and the rest of the economy is actually putting more of a strain on housing cost. Los Angeles has added tens of thousands of jobs in almost all sectors of the market, from the lower level entry jobs, all the way to opening space for new executives and CEOs, and as you can expect, that means more people look to move to the city to fill the openings which the jobs have created; thus adding to the demand for housing that seems insatiable in Los Angeles.
The Proposed Solutions…
The answer seems simple, right? Just build more houses. Unfortunately, nothing is ever that easy. Up until recently there was a push among lawmakers to, at the very least, keep the cost of housing under control through litigation.
The solution seemed concentrated on reducing the cost for contractors to build homes and new developments. Prior to this year, litigation seemed to offer great tax incentives to builders willing and able to quickly build new multi-family units, especially in urban areas. Especially to those builders who made such new developments more eco-friendly and energy-efficient.
Many state law makers have focused energy and attention on low-income housing subsidies. The legislative analyst’s report estimated that…