Who Moves Into New Housing, And Why?

Homes at Franklin Ave & Las Palmas in Hollywood. Photo by Ian Freimuth.

For anti-housing advocates, new market-rate housing isn’t a part of the solution to the affordability crisis, but the cause of it. New housing, they argue, attracts higher income residents from outside the city, and those new residents drive speculation, rent hikes, and further redevelopment that displaces vulnerable households. They also create demand for new low wage jobs that provide goods and services, which exacerbates the affordable housing shortfall.

This was one of the key arguments made by Measure S supporters to stoke fear and outrage among Angelenos concerned about spiraling housing costs and homelessness: Additional supply begets additional demand, all in service of outsiders and the moneyed elite, and all at the expense of existing residents.

This conclusion depends on the premise that new housing draws in residents from other cities. If it’s not attracting out-of-towners, then the homes are serving locals who would be looking for a home whether or not the new housing was built. It would also mean that the demand for low wage jobs doesn’t increase when new housing is built, because the people generating that demand already live here. And if they already live here, it should be uncontroversial that they need a place to live, right?

For those reasons, it’s essential to understand whether the basic premise of this anti-housing argument is correct. Does new housing mainly serve to attract residents from other regions? As you’ll read below, an intuitive understanding of housing choice doesn’t align with that interpretation, and neither does the data.

Warehouse space converted to condos in the Arts District. Photo by Rod Ramsey.

Who’s moving into new housing?

The most fundamental question we can ask about new homes is this: Who are they for? The assumption by slow-growthers is that new housing is mostly for someone else, whether it’s snobby out-of-towners, wealthy globalists looking for a place to park their cash, or some other distasteful construct. It’s not for us, it’s for them.

Here’s what the best data available says: For the LA metro area, 68% of those who recently moved into new housing (built 2010 or later) came from within 50 miles of their new residence. That means over two-thirds of households living in new homes came from another home in the LA area.

For housing built between 2000 and 2009, 88% of recently-moved residents are from within 50 miles. The people moving into newer housing are overwhelmingly Angelenos, not interlopers.* They are you and me, and they need a place to live just like anyone else. Imagine where those 88% would be living if we’d built even fewer homes in the 2000s.

All of these newly-relocated households are making space for someone else in the home they just left behind. (Or they’re forming a new household by breaking away from roommates or leaving their parents’ home, which is great too.) New housing is typically more expensive than other options on the market, so it’s a safe bet that these residents’ previous homes are more affordable than their new ones. However it is a proven fact that many prefer to buy a new house that repair their current one. They might see it as an easier and faster solution, not many have the time or are willing to argue with their contractor on how to lay tiles in your shower room for instance.

Even if some people are downsizing into newer units, such as when an empty-nester couple moves from a single-family home to a less expensive condo, they’re doing us a favor. They’re making that home available to larger or younger families that can make better use of its space, or they’re giving a developer an opportunity to turn it into more (and more affordable) places for people to live. New condos selling for $500,000-600,000 are out of reach for many LA area households, but they’re within the grasp of far more families than a million dollar single family home. By promoting the density bonus and other incentives for these projects, we can get income-restricted units out of the bargain and extend the benefit of more housing to families living at a wide range of incomes.

So the Census confirms that most residents of new housing are from the region, and that’s important. When we don’t build enough housing, those people lose out on choices. And when they don’t have as many choices, they go looking for older, less expensive housing as the next-best option.

We’ve covered the 68%, but maybe you’re thinking that that leaves about 32% who aren’t from here. What’s their deal?

Newly-built homes at Broadway and Lincoln in Santa Monica. Photo by Ollie Siebelt.

Why do people move to a new city?

32% of those living in the newest homes are from outside LA, but how does development of new housing play a role in their decision to move here? For this question, it’s probably best to think about your own experiences and those of your friends and family.

If you’ve ever moved to a new city, just ask yourself: At what point did home selection enter into the decision to move? Did you say to yourself, “Wow, I saw they built this amazing new apartment building in Hollywood. I’ve gotta get out of Omaha and into one of those units.” Probably not. (But if so, please get a hold of us because you are a fascinating specimen and we’d like to study you further.)

For most of us, choosing exactly what home to rent or buy is one the last decisions in the difficult process of pulling up stakes and settling in a new city. We move to take a great new job, or to go off to college, or to chase our dreams for reasons that have very little to do with housing availability. We take the leap, then we figure out the rest as we go.

To the extent that housing choices do factor into our decision, it’s to figure out if we can actually afford to live in the new city. Most of the time we first decide that we want to move, then we decide if we can. Quite obviously, the supply of new market-rate housing isn’t going to be the thing that deters us. If we’re price sensitive, we’re not looking at new housing anyway. What could deter us, and absolutely does for thousands every year, is a housing shortage that’s driven up the price for homes of every age and quality. Our exclusionary housing policies pose no barrier to higher-income migrants from other cities, but they work better than any border wall at blocking out new low and moderate income households.

When we look at the data as well as our own personal experiences, the argument that new housing is attracting rich people and impoverishing existing renters simply strains credulity. It’s a convenient fiction that we need to move beyond. People move to Texas for the cheap housing; they don’t move to LA for the expensive stuff. So long as people keep moving to our city—and it’s a great place to live, so why wouldn’t they?—we need to keep building more housing of all kinds.

*Note: We don’t buy into the kind of exclusionary thinking that pits existing residents against future ones. It’s a zero sum solution in a world with a whole variety of positive solutions available, and it diminishes the spirit to approach community planning, and life in general, in such an us-versus-them fashion. We are engaging with the argument not to give it credibility, but to show how anti-housing arguments fail to stand up even on their own terms.

Pro-housing policies for Los Angeles

As we wrote in our previous post, Abundant Housing LA (AHLA) supports increasing local funding for affordable housing in the City of Los Angeles. Because LA needs more new homes of all types, we identified several good options that could raise money for affordable housing construction and preservation without discouraging development of market rate housing.

Funding for housing subsidies is a necessary but not sufficient part of the solution to our housing crisis. Los Angeles also needs to reform rules that have made it difficult to build enough new homes in the city. We need to improve tenant’s rights, and we need to encourage innovation and diversity in our housing. We believe that the City Council needs to advance a comprehensive package of pro-housing funding measures and rule changes.

To help us identify good ideas, we surveyed our members on 18 possible policy changes. The chart below shows them in order of support. As with the funding options, we view this feedback as advisory. We will not automatically support, nor limit ourselves, to the top-rated policies on the chart. The rest of this post gives a brief explanation of the top nine ideas.

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1. Expand density bonus

Under the state density bonus law, developers can add up to 35% more units than are allowed by the zoning for a site if they also include affordable homes. AHLA considers this a win-win policy and we have supported many of the density bonus projects proposed in LA. Unfortunately, the program hasn’t been utilized by enough builders to provide a meaningful boost to home construction, partly because some developers find that the bonus provided isn’t big enough to cover the cost of including low-income units. This idea is to allow developers who utilize the full 35% bonus to get an even bigger bonus (e.g., 8 market units per affordable unit compared to approx. 3.5 in base bonus) if they continue to provide additional affordable units. We should note that the City was mandated by Measure JJJ to pass a Transit Oriented Communities incentive program to expand the density bonus near transit. AHLA supports this program, but earlier drafts did not substantially increase the market-to-affordable bonus ratio.

2. Require community plan upzoning

Since the start of the community planning era in Los Angeles in the early 1970s, these plan have downzoned the city, contributing to LA’s housing crisis. Even recently drafted community plans are stingy in increasing housing capacity. They allow enough new homes to meet expected population growth, and nothing more. We believe that the city’s approach locks in low vacancy rates and high housing costs. This idea is to require community plans to upzone so that the realistic, buildable housing capacity is at least 50% higher than the expected population for the plan area. This will provide enough “slack” and flexibility in LA’s housing market to help relieve the pressure of insufficient supply.

3. Eliminate parking requirements near transit

Requiring parking spaces for every new home adds to the cost of new units, takes space that could be used for homes, prevents some smaller properties from being developed at all, and encourages driving. We tested two policy ideas around parking reform. This one to eliminate mandatory parking minimums near transit was very popular, getting nearly 80% support. The other, to eliminate all parking requirements in the city, received fewer votes (just over 50%).

4. Allow small apartments in single family zones near transit

Areas zoned to allow only detached one-unit homes are the largest category of land use in the City of Los Angeles. Some of these areas are located right next to train stations, walkable shopping districts, and employment centers: the exact places where we should be adding homes. A compromise solution that allows more homes and keeps some of these R1 (and similar zoned) neighborhoods predominately low-rise is to allow small multi-family buildings to coexist with single-family homes. As one resident argued, if we are worried about mansionization (very large single family houses), why not let there be duplexes, triplexes, fourplexes, bungalow courts, etc that add homes but fit well into the neighborhood?

5. Double CEQA threshold

CEQA is the state law that requires analysis of the potential impacts of public or private actions that need government approval. In the City of Los Angeles, developments with 50 or more new units of housing have to be analyzed under CEQA, and third parties can sue alleging that the environmental review was not done properly. These steps have slowed down or stopped thousands of new homes from being built. Many AHLA members are YIMBYs partly because they believe that blocking new homes in cities leads to more sprawl and climate impacts. We don’t oppose CEQA when applied to polluting or environmentally destructive projects, but we think that adding more homes in cities is usually an environmental positive that should be exempt from review. We tested two reforms to LA’s CEQA thresholds in our survey: Doubling the threshold from 50 to 100 units received over 70% support and decoupling CEQA from the number of new homes (tying it instead to the size and ecological value of land) received over 60% support.

6. Add staff + streamline process to cut approval time for new homes

There are many rules and fees that add to the cost of building new homes. Some of these are critical to the safety and quality of new construction. Others may be worth reviewing. One hidden cost is the length of time it takes for new homes to go through planning processes and building inspections. Because developers borrow money to pay for land and construction, the longer it takes to approve and build, the higher price they need to charge when finished. This idea is to hire more planning and building department staff, streamline procedures, and better coordinate between departments so that the time for approving proposed new homes is reduced by 50%.

7. Set density in general plan, details in community plans

As mentioned in point 2 above, the experience with community plans in LA is that they have tended to cut rather than increase the amount of homes allowed. This may be partly because community planning tends to encourage  a parochial and exclusionary attitude rather than a big-picture, welcoming attitude. This idea is to plan where growth should be allowed through the citywide update to LA’s general plan, based on objective criteria like proximity to transit and jobs, topography, need to reduce segregation, etc. Community plans would still exist and fill in details like design standards for new developments.

8. Give displaced tenants right to return

When rent-stabilized homes in LA are demolished for a new development, the developer has to replace these units with deeded affordable homes and has to pay the existing tenants relocation assistance. But the tenants will probably not be able to move back into the new development, because the required affordable units will allocated through a lottery or long waiting list. This idea is to give those households who were displaced by development a priority right to move back into replacement affordable units, if they choose to. Giving residents the right of return would help expand tenant rights and ensure those who are displaced also benefit from the new housing once it is complete.

9. Grant HHH funds without needing local council approval

City voters passed Measure HHH in 2016 to fund the construction of permanent supportive homes for homeless Angelenos and other affordable units. To receive money, developers of these homes need to provide a support letter from the Council office in which the proposed project is located. This essentially gives local veto power to City Councilmembers (and to any anti-housing or anti-homeless residents who may have a strong voice in their district). Addressing homelessness is a citywide priority, and this idea is to remove that local veto point.

We are pleased that the responses to our survey identified a mix of planning, regulatory and tenant’s rights policies with good levels of support. Creating an impactful package of reforms will require some additional thought.

Please let us know if we missed any good policy ideas or if you have favorites from our full list. You can find us on Facebook https://www.facebook.com/abundanthousingLA/ or twitter @abundanthousing