The incredible shrinking megacity: How Los Angeles engineered a housing crisis

Los Angeles used to be the promised land for America's homeowners. Now it's tearing at the seams

Published April 5, 2015 2:00PM (EDT)

  (<a href=''>trekandshoot</a> via <a href=''>Shutterstock</a>)
(trekandshoot via Shutterstock)

Los Angeles is at capacity.

The Los Angeles-Santa Ana-Long Beach Metro Area is now, by one measure, the most expensive big-city region in the country in which to buy a home; the average home price is nine times the average income. The vacancy rate for apartments in Los Angeles County, with 10 million people the nation’s largest, is now 3.3 percent — lower than in New York City.

The tightest of these concentric circles, the City of Los Angeles, is about to hit its development limit. According to planner Greg Morrow, the city is now zoned to house at most 4.2 million people. The current population is 3.9 million.

Los Angeles and its satellites — once the land of the American homeowner dream — now form the most stunted urban region in the country. There were 28,000 new housing starts in the L.A. Metro last year (pop. 13 million), versus 64,000 in Houston (pop. 2 million). There were fewer permits per capita in Los Angeles than in San Francisco.

This has become expensive for homeowners and tenants alike. The former spend 40 percent of their income on mortgage payments; the latter spend 48 percent of their income on rent. Both figures are the highest in the country.

Los Angeles is not the only city with a regulation-induced housing shortage. As the cover story in this week’s Economist attests, the problem is global: From Mumbai to the Bay Area, the magazine writes, “the value of housing is an ever-greater store of wealth.” According to a recent argument by Matthew Rognlie, a doctoral student at Harvard, the increasing global returns to capital calculated by the French economist Thomas Piketty in his best-selling book “Capital in the Twenty-First Century” can be explained almost entirely by housing wealth.

What makes this so striking, in the case of Los Angeles (the city), is how much room there is. With slightly more than 8,000 people per square mile, L.A. is less than one-third as crowded as New York City and less than half as dense as San Francisco.

And yet, L.A. is much, much closer to its residential capacity than the more compact and more populous NYC. Los Angeles has created a crisis of artificial scarcity; a burden for renters, a drain on economic growth, and an environmental disaster. The city has planned itself into a cage.

It wasn’t always this way. According to Greg Morrow, a planner and professor, Los Angeles had a residential capacity of 10 million in 1960. In the years since, that has fallen by 60 percent, as the city turned over planning responsibilities to communities. Local control led to lower densities, larger minimum lots, parking requirements and setbacks.

In Morrow’s dissertation, he neatly sums up the varied effects of four decades of community control. Poor, largely minority neighborhoods have borne the brunt of new construction. Affluent, largely white communities have effectively thrown up the gates.

“It’s planning apartheid,” Morrow told me when we spoke last month. “You have essentially a minority of a minority of a minority who determine the housing policies for the vast majority of Angelenos.” The first minority are homeowners; the second, those engaged in land use issues; the third, those who have the time and money to litigate.

“They think downzoning will stop growth,” Morrow said. "It won’t stop people from coming to LA. It makes the lives of those who do come that much worse."

In "City of Quartz," the polemical and fascinating history of Los Angeles that turns 25 this year, Mike Davis devotes a chapter to the influence of what he called the “homegrown revolution.”

Davis outlined three keys to understanding the homeowners’ cabal in the city’s single-family suburbs, which take up nearly 80 percent of the residential land here (vs. 25 percent in New York City and San Francisco).

  1. “Los Angeles homeowners, like the Sicilians in 'Prizzi’s Honor,' love their children, but they love their property values more.”
  2. “‘Community’ in Los Angeles means homogeneity of race, class and especially, home values…."
  3. "The most powerful ‘social movement’ in contemporary Southern California is that of affluent homeowners, organized by notional community designations or tract names, engaged in the defense of home values and neighborhood exclusivity.”

Whether today's slow-growth activism owes more to the racist tradition of restrictive covenants, to concerns about property values, to a knee-jerk resistance to change, to misguided environmental activism, or to worries about aesthetics and traffic, is hard to say. All these things are comfortably couched in the rhetoric of “preserving neighborhood character.”

In any case, planning in Los Angeles has for decades been a fragmented affair. “L.A. is planned like 35 separate cities,” Morrow notes. "There’s almost no coordination and almost no citywide planning.”

When projects can’t be zoned out of existence, they are litigated. The California Environmental Quality Act, a reliable tool of the state's NIMBYs, has thus had the perverse effect of halting infill development and pushing new housing onto farms and orchards at the urban fringe. When the lawyer Jennifer Hernandez sampled nearly a hundred California cases from the past two decades in which plaintiffs had sued, questioning the validity of a project’s environmental impact report, she found that more than half of those developments were urban infill — exactly the type of development that good-faith environmentalists should be applauding.

The irony of this is obvious: Building restrictions in Los Angeles proper haven't just fueled the greenfield residential boom in the San Gabriel Valley and Inland Empire. They also force commuters to spend more time on the road getting to work. In this sense, Morrow argues, housing affordability is the greatest environmental problem the city faces.

The city’s demographic profile makes the phenomenon even more curious. Among U.S. cities with over 500,000 people, only New York City has a lower homeownership rate than Los Angeles, where three in five households rent. The broader Southland has the highest percentage of renters — 52 percent — of any metro area in the country.

Why haven’t those tenant majorities fought back against the region’s suffocating housing restrictions? For one thing, the participatory requirements of community planning favor the wealthy and the educated, who are more likely to own. For another, it’s much easier to generate opposition than support for new development. A new apartment building will upset a very specific group of people. Its benefits, meanwhile, are distributed so widely that they are, on a personal level, marginal.

In fact, the Proposition U ballot initiative, one of the city’s most stringent anti-development laws, passed by more than a 2-to-1 margin in 1986. Prop U, considered the culmination of the homeowner movement, effectively froze new building on the city’s low-slung commercial boulevards (which are also its transit corridors).

Without simplifying the political context of that vote, one can say that it symbolizes the lasting unwillingness of the Los Angeles electorate to advocate for growth – even if it is in their financial interests.

The result? A city whose famous Hollywood sign ought to be joined by another: “No Vacancy.”

By Henry Grabar

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