Market Forces Making "Affordable Housing"
Market forces are creating "affordable housing" the hard way, here and across the U.S.
The real estate boom is over. Condos in expensive new complexes are not selling, so the builders and owners decide they are now in the apartment rental business, rather than the condo-selling business. You can read all about it at the New York Times:
http://www.nytimes.com/2007/01/16/realestate/16rentals.html?ex=1326603600&en=10a4951456536469&ei=5088&partner=rssnyt&emc=rss.
Why does it matter? It means that, rather than continuing to hand hundreds of millions of our tax dollars to subsidize construction of "affordable housing" units, we should give the market some time to allocate housing on its own.
The real estate boom is over. Condos in expensive new complexes are not selling, so the builders and owners decide they are now in the apartment rental business, rather than the condo-selling business. You can read all about it at the New York Times:
http://www.nytimes.com/2007/01/16/realestate/16rentals.html?ex=1326603600&en=10a4951456536469&ei=5088&partner=rssnyt&emc=rss.
Why does it matter? It means that, rather than continuing to hand hundreds of millions of our tax dollars to subsidize construction of "affordable housing" units, we should give the market some time to allocate housing on its own.
Posted by Walter Moore @ 1/16/2007 08:39:00 AM
27 Comments:
Expensive apartments instead of expensive condos! Yeah, the affordable housing crisis is solved! What tripe.
Hey, Walter, why not push for another Depression! 25% unemployment ought to bring down the cost of housing. Think bigger.
Unsold expensive condos become desperate income property, rented at below market price.
I concur with Walter's posting.
In Orlov's article today where he strung together a few quotes with weak analysis, Garcetti actually brags about his "accomplishments" in "affordable housing" and other areas:
"I think this council has a lot to be proud of for this past year, where we took significant steps toward improving public safety, dealing with the homeless and looking at creating more affordable housing," Garcetti said.
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Thanks Eric, it's comforting to know that the gang problem has been solved now that public safety has been "significantly improved."
It's a bit odd for Mayor Villaraigosa's support for LAPD open hearings. Quite odd, public's protest against gangs pushed him to publicly have a green light on cops. What a disgrace! Who's side is he anyways, the thugs or justice? There's more to this than meets the eye! Why is he so against our law and for gangs? WHY?
Because Antonio was against gang injunctions previous poster. Like Montoya from Culture Clash stated "the mayor is a gang banger in a suit."
Someone give Antonio is ADD medication. He talked about helping the homeless. Has done nothing. Then it was affordable housing. Done nothing. Then it was traffic. Done nothing. Then it was LAPD recruitment. Hurting now more then helping. Done nothing. Then it was the gang problem. Not only done nothing but hasn't said a word about the $2 billion cit is wasting on gang violence.
Apparently our midget mayor can't keep his mind on one topic for more then 2 seconds. No, I forgot his only priority has been LAUSD.
Though I understand what Walter is offering - the conservative notion that market forces currently benefiting the wealthy will eventually swing toward middling classes; Adam Smith - and think it may have actually happened periodically in this country's history, the article he references doesn't fit his argument.
In Washington D.C., and cities like it (including Los Angeles) inflated housing markets created of, for, and by the wealthy, eventually soften creating a temporary glut of luxury units. As the NYT article points out, these units are not sold to low income buyers at a tremendous loss, rather, they are rented to wealthy individuals ($4,000 is not 'affordable' rent) on short leases until such time as the market recovers.
The idea that middle class people aspire to rent is wrong. The American Dream - aspiration to home ownership - is what drove many people west and to L.A. in the middle part of the last century. It is cynical to suggest that we will solve the housing crisis rapidly developing in this country by offering rental units to people at half their monthly family income. If we expect families to thrive by living paycheck-to-paycheck as renters, while enriching the 1% who can afford to do condo-conversions, we are accepting the death of the American middle class.
We need smart urban planners focused on solving the ownership crisis, not conservative ideologues searching for factoids that may support rapidly discredited economic theory of the 18th century. Sorry Walter, you’re just plain wrong on this one.
"Unsold expensive condos become desperate income property, rented at below market price. I concur with Walter's posting."
Ah, the American dream, realized. Which of us *didn't* grow up fantasizing about the day we could someday rent someone else's desperate income property (until such time as the market recovers, at which point we'll be booted out and forced to look for another rental).
Heckuvajob, "market forces"!
Patrick Meighan
Los Angeles Greens
Top Five Most Expensive U.S. Rental Markets (2005, 4th quarter):
1) New York City (avg. monthly rent: $2400)
2) San Francisco ($1573)
3) Los Angeles ($1421)
4) Orange County ($1384)
5) San Jose ($1330)
Source: msn.com
Walter, spoken like a true real estate agent! how much money did you make off the housing boom?
enough to enable you to sit around in pyjamas and blog all day?
Walter -
Wow! Its been great since you came back from France you've been hitting home runs on every article you've written.
This is a good piece and good discussion.
Don't let the leftist idiots on here distort the truth. I've never seen you blogging in your PJs.
Cheers,
Mayor Sam
"How about removing the red tape and bureaucracy that a home builder or craftsman or small developer has to encounter."
Wow, just what a gigantic city built on a fault line needs: a bunch of non-permitted, non-inspected buildings propped up overnight like lean-to's. Can't wait 'til the next earthquake. Who's gonna dig out all the dead bodies? The free market?
Patrick Meighan
Los Angele Greens
There are two huge condo conversions making its way to the Westside by the Federal building. Even though tons of homeowner orgs. and businesses are against it because of the horrible traffic right smack at that point, the mayor is pushing forward. Why? Because these developers have donated thousands to his campaigns. Money talks in this city and you can forget about what's the best for the city.
Patrick,
Without the "Free Market" we would be digging dead bodies as we speak, from starvation.
Good afternoon ladies and gentlemen (removes hat and bows low):
Sots, no answer to my other question on a previous thread? Has the cat got your tongue? (Sighs) Must I drop the other shoe? Oh bugger, that means I must do without proper footwear. But then again, a barefoot pirate is.....well, a barefoot pirate, savvy?
But I am curious as to how many of the ultra-luxe-swanky-type housing developers poured money into campaign coffers on the promise that green lights equal porch lights. And now the market is in the doldrums for that sort of lodgings. "Tis better to live aboard in the Marina it is. No property taxes to pay, savvy?
Zuma lad, are you about? I have something for you to put your nose onto. How many deputy mayors are there? And of those, how many of them have mortgage lending, investment banking, real estate law or planning experience? Once you find that out, ask yourself if there is a common thread. Follow the thread.
*Jimmy Blackman
*Ramallo
Free Market = fine
Unrestrained Free Market = rat-filled shanties (built upon trash dumps, with cancer-causing chemicals) just waiting for the next earthquake to collapse and kill hundreds of thousands.
No thankee.
Patrick Meighan
Los Angeles Greens
Het, 9:36 According to Garcetti he already solved it, two years ago
10:17 You forgot about transportation, schools, airports, and la river parks
Thanks Cpt Jack!
Meanwhile..ZD told the mayor and city council we were gonna get affordable housing this way because of your condo-conversion craze that had no real demand behind it and it's all gonna fold in like a house of cards. Check the blog, TV 35 and KABC. Sorry I was right. Between this news and Venice Beach ordinance being ruled (preliminary finding) as unconstitutionally vauge on it's face...You guys running City Hall are either dumb, or shady...either way, it ain't good. Cut it out and start behaving in the best interest of the community, and if you don't know how, hire somebody.
ugtgof
earthquakes anyone? what about the thousands of broken structural steel frames in many high rises that are known to everyone, but since they are prohibitively expensive to repair (like rebuild) they just wait for the final shake.
So, ZD says WE ARE going to get the affordable housing I've been screaming about on TV 35, Mayor Sam and KABC radio. It's called brand-new luxury condos that there is no demand for so prices will be forced to be slashed by the owners.
ZD on Mayor Sam Nov. 27, 2006.
(Ahhh! Never thought that they would have to stoop to "renting" them! Wish I'd thought of that.)
To 9:13:
LOL, and I like your line about the Depression. Good one.
Let me elaborate a little lest you think I'm completely nuts:
The history of cities -- at least, way back when I studied it -- works kind of like this: new and improved housing is built; the rich move into it; the less rich move into the first group's old homes; and so on down the line. Eventually, the process starts anew with "gentrification" of formerly classic houses, buildings and neighborhoods that fell into neglect (e.g., Adams district).
So, no, the brand new condos in skyscrapers with the panoramic views won't go directly to the couple that decided to have three kids in their teens rather than go to college, but the new, unoccupied condos will tend to drive prices down rather than up. It happens over time.
Of course, as economists say, "in the long run, we're dead."
To 10:44:
"Solving the 'ownership crisis?!'" Give me a break! Have we now gone from the phony "affordable housing crisis" to the "ownership crisis?" What's next? The "pool, pool house and German sedan crisis?"
Would you care to compare the percentage of population in major cities around the world that rent rather than own? Here's what you'll find: it's relatively high. Why? Because it's less hassle, especially when buildings go vertical, for one person or company to own a building, and the occupants to be able to come and go.
If you want to help people afford more of whatever they want, cut taxes, cut governmental spending, and let people keep more of the money they earn. Or is that too 18th Century for you? Perhaps you'd like something more 19th Century, like the great ideas that Marx fellow had? That worked out just great in the U.S.S.R., Eastern Europe, Cuba and China, didn't it?
Sam --
Thanks and LOL.
I just love all the "facts" the rocket scientists here have postulated about me when they can't think of any arguments on the merits. Sometimes I'm supposedly rich, other times, destitute. In fact, I never blog in pajamas after 3:00 p.m. Rather, I always put on a suit before watching Hawaii 5-0.
Patrick --
I agree with you 100% that we need building codes and inspections. That's one reason I can't really be a Libertarian. Without enforcement of codes like that, I think we would have far more fires, and far more deaths whenever earthquakes hit.
However, as those in the construction and development business can tell you, the delays in getting permits really are unreasonably long, and this actually harms the city and increases housing costs.
Example: I'm informed that it would take THREE YEARS to convert a vacant lot in our neighborhood -- a lot which used to be a gas station -- into ANYTHING. I'm not talking about putting up a major high-rise, just any generic, properly scaled building. That's too long.
Another example: I've got some friends trying to build a house on a hillside in an existing neighborhood. They have had to spend ONE YEAR just to get geologic testing completed. That's a year during which they've had to make payments on the loan for the land. That's too long.
City Hall should, in my opinion, focus on the "basics" like code enforcement, and speeding the permit process. Rather than handing hundreds of millions to developers who contribute to career politicians, let's hire adequate staff at Building and Safety so ALL builders and developers can do their jobs without crippling delays and excessive costs. Alternatively, we could conceivably privatize the process, through licensed and bonded private inspection companies that fully document and videotape their inspections.
I will add this: in my own experience, with simple home remodelling, the people at Building and Safety have been great. There were no delays; we got inspections within one business day after calling for same; and our inspectors spotted a variety of mistakes our contractor made, for which I was glad, because our house was safer and better as a result.
10:12 a.m.
You ask "WHY" Tony Villar is pro-gangs?
First of all, MS 13 and even the lesser gangs are controlling the drug trafficking. Drug money generates more money for MEXICO than tourism and remisas and oil!!!
Tony Villar WILL NEVER get rid of the gangs because he is working for Mexico!
And secondly, TONY VILLAR is a gangbanger, card-carrying member of MECHA, and one of the original REconquistas! The Gangbangers are his FOOT SOLDIERS for the Mexican army of Los Angeles. If and when a Civil War over illegal immigration breaks out, Tony Villar already has his Mexican army in place!
Tony Villar is completely prepared for the inevitable civil war that is coming. In fact, he relishes the idea! Mexico has only one goal....to take over the USA!
Dear Walter,
You told us "Another example: I've got some friends trying to build a house on a hillside in an existing neighborhood. They have had to spend ONE YEAR just to get geologic testing completed. That's a year during which they've had to make payments on the loan for the land. That's too long."
HOW LONG DID IT TAKE MERUELO TO GET HIS PERMITS?
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