Despite several years of falling home prices, housing still remains out of reach for many middle income residents in Los Angeles, threatening the region’s economic competitiveness, according to a report to be released Thursday by the Los Angeles Business Council.
The report, authored by UCLA real estate professor Paul Habibi, will be presented at an annual housing summit at UCLA on Thursday. Among the findings: The average one-bedroom rental price of nearly $1,800 a month is one-third more than what the median household can afford. And the median income earner can only afford a house worth about $200,000, well below the August county median price of $350,000. Only New York and San Francisco have lower levels of affordability.
The report also said that the county is not producing enough new housing units. While 22,500 new units are required each year to keep up with population growth, this year, only 13,100 units are being developed, a 40 percent deficit. “The demise of redevelopment agencies has exacerbated this shortfall,” Habibi said in the report.
The biggest shortage is in workforce housing for middle-income earners, with household incomes between $42,000 and $64,000. “These households fall into a housing ‘donut hole’ by earning too much to qualify for subsidized affordable housing, but too little to afford the high-end market-rate housing preferred by developers.”
As a result, the report said, middle-income earners are leaving the county for more affordable housing markets, making it more difficult for companies to find quality employees.
The report recommends raising density thresholds for housing projects along transit corridors, changing the California Environmental Quality Act to allow exemptions for mixed-use infill projects targeting multiple income levels and having city governments take over the task of redevelopment from now-defunct redevelopment agencies.