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It all comes down the regulatory hurdles. Even land prices are the result of rent-seeking behavior among land-holders due to regulatory impediment. If Californ

It all comes down the regulatory hurdles. Even land prices are the result of rent-seeking behavior among land-holders due to regulatory impediment. If California would pass legislation radically limiting regulatory burdens that municipalities and other legislative bodies could pass, this problem would disappear within a year or two.

conanbatt 9y ago
Well, a bit more than a year or two, pluis its impossible to take out all reg's immediately. Just eliminating rent-control could have devastating political effects. But even california official economist reports say the situation is harming the state tremendously. There is no debate about what needs to be done. Its just about politics now.
slg 9y ago
Simply removing regulation is not enough to fix everything. Downtown Los Angeles is a prime example of that. It has been seeing a construction boom in recent year and loosened regulation is probably responsible for part of that boom. However since there is little regulation on the type of housing that is being built, the new construction is all coming in at the top of the market. This is because buying land and building a mid-market apartment building is not much cheaper than buying the land and building a luxury apartment building. The end result is that Downtown Los Angeles is full of luxury apartments with some of the areas highest vacancy rates as landlords are making more money charging high rents at 80-90% occupancy than they would with lower rents at 100% occupancy. Meanwhile these new buildings are replacing much more affordable housing which is pushing lower income renters out of their homes. Eventually those luxury apartments will trickle down to cheaper rent at the bottom of the market, but often times that means forcing a low income family out of their home in a gentrifying neighborhood into a less desirable area that is often farther from amenities the city offers like public transit which objectively make their lives worse.
- greggman 9y ago
  knowing how bad downtown LA is/was in terms of poverty and crime it's hard for me not to be happy at the gentrification and cleaning up of DTLA. It still has a ways to go but I'd love a safe and clean DTLA. I don't know what the implications are for the poor that get displaced but old DTLA was (and still is) a blight on the city. Of course a solution that some how helps the poor down there would be great but keeping the place a cheap ghetto doesn't seem like the right thing either
  - slg 9y ago
    You are taking the perspective of someone who is at least middle class. If you were a lower income family and you are pushed from DTLA to Whittier because of gentrification it could have a huge negative impact on your life. A "safe and clean DTLA" would do you no good in that instance. Also it has now been a few years since DTLA was a "blight" or a "cheap ghetto". Is there a bigger sign of gentrification than Whole Foods[1]? [1] - https://www.wholefoodsmarket.com/stores/downtownlosangeles https://www.wholefoodsmarket.com/stores/downtownlosangeles
- santaclaus 9y ago
  Most of the construction in DTLA was previously parking lots... I find it hard to believe that mostly vacant parking lots adjacent to a mostly vacant sports stadium is somehow a superior proposition to a sustainable urban fabric than much needed housing.
  - slg 9y ago
    When was the last time you were in DTLA? There are many new buildings that weren't built in former parking lots and the gentrified area isn't purely centered around LA Live. You can walk 10 minutes south or west of the Staples Center and be in non-gentrified areas but if you walked 30 minutes north it is heavily gentrified.
- Decade 9y ago
  About 10% vacancy seems to be a healthy amount. If that were over the entire city, and not only in new developments, then people would have much more freedom to move. And then prices would go down. 100% occupancy is bad, because it means the city is not flexible to changing demands. Fill up that new development 100%, and then the next person who needs to come in would need to double up, or bid higher and displace somebody. That is my big problem with the Planning process, trying to manage growth. It’s slow and brittle to unanticipated changes.
  - slg 9y ago
    It isn't over the entire city, it is over a small neighborhood within the city. The vacancy rate in that neighborhood was at 12% while the entire city rate was at 4%. That plus the rate being at a 17 year high would seem to indicate a problem. [1] [1] - https://la.curbed.com/2017/9/15/16316040/downtown-la-high-vacancy-rate-rent https://la.curbed.com/2017/9/15/16316040/downtown-la-high-va...
    - mjevans 9y ago
      Yes it does. The problem is lack of supply in the overall market to drive the price to a reasonable point.
- closeparen 9y ago
  The whole point of a market is that capital is most incentivized to come alleviate a shortage when prices are highest. There might be a cogent argument for fully centrally planned housing, but instituting price controls on new market supply when a shortage is at its worst is a staggeringly clueless demand. And let’s be clear, affordable vs luxury housing is about price controls, not the units themselves. There is nothing physically embedded in the average “luxury” 700sqft unit that makes it worth more than a McMansion in Iowa. Only the supply and demand situation where it’s located. Countertops and dishwashers don’t add +$2000/mo.
altria 9y ago
Saving for retirement is hard due to the government's inflationary policy. The returns on savings accounts, bonds, or other traditional savings vehicles are untenably low. Thus, every Mom and Pop is thrusted into speculative investments such as the stock market or real state. Small wonder then they seek to protect their home equity. It's largely their only retirement plan.
- morio 9y ago
  It's the other way around. A deflationary economy forces the feds to lower interest rates to encourage lending. We've had record breaking low inflation rates for a decade now. A 'healthy' inflation rate would be in the 3.5-4.0% range. Yes, money is supposed to lose value. If it did not no one would spend.
  - adrianN 9y ago
    People would still buy things they need. They might not buy things they don't really need, but that doesn't sound like such a bad thing to me.
  - megiddo 9y ago
    That's nonsense. There's no objectively healthy inflationary rate. Low interest rates are the key factor in driving demand for borrowing. Low interest rates signal a healthy supply of savings from which to borrow. So, low interest rates naturally match a large supply to a healthy demand. Such a scenario would create a market for investment-led expansion. High interest rates signal the opposite. Either the supply of available savings is insufficient, or relative demand is high enough to drive out uncompetitive demands for savings.
alexasmyths 9y ago
"regulatory hurdles" those may be in place because the citizens want it that way, which is kind of their right.

conanbatt 9y ago

Well, a bit more than a year or two, pluis its impossible to take out all reg's immediately. Just eliminating rent-control could have devastating political effects. But even california official economist reports say the situation is harming the state tremendously. There is no debate about what needs to be done. Its just about politics now.

slg 9y ago

Simply removing regulation is not enough to fix everything. Downtown Los Angeles is a prime example of that. It has been seeing a construction boom in recent year and loosened regulation is probably responsible for part of that boom. However since there is little regulation on the type of housing that is being built, the new construction is all coming in at the top of the market. This is because buying land and building a mid-market apartment building is not much cheaper than buying the land and building a luxury apartment building. The end result is that Downtown Los Angeles is full of luxury apartments with some of the areas highest vacancy rates as landlords are making more money charging high rents at 80-90% occupancy than they would with lower rents at 100% occupancy. Meanwhile these new buildings are replacing much more affordable housing which is pushing lower income renters out of their homes. Eventually those luxury apartments will trickle down to cheaper rent at the bottom of the market, but often times that means forcing a low income family out of their home in a gentrifying neighborhood into a less desirable area that is often farther from amenities the city offers like public transit which objectively make their lives worse.

greggman 9y ago
knowing how bad downtown LA is/was in terms of poverty and crime it's hard for me not to be happy at the gentrification and cleaning up of DTLA. It still has a ways to go but I'd love a safe and clean DTLA. I don't know what the implications are for the poor that get displaced but old DTLA was (and still is) a blight on the city. Of course a solution that some how helps the poor down there would be great but keeping the place a cheap ghetto doesn't seem like the right thing either
- slg 9y ago
  You are taking the perspective of someone who is at least middle class. If you were a lower income family and you are pushed from DTLA to Whittier because of gentrification it could have a huge negative impact on your life. A "safe and clean DTLA" would do you no good in that instance. Also it has now been a few years since DTLA was a "blight" or a "cheap ghetto". Is there a bigger sign of gentrification than Whole Foods[1]? [1] - https://www.wholefoodsmarket.com/stores/downtownlosangeles https://www.wholefoodsmarket.com/stores/downtownlosangeles
santaclaus 9y ago
Most of the construction in DTLA was previously parking lots... I find it hard to believe that mostly vacant parking lots adjacent to a mostly vacant sports stadium is somehow a superior proposition to a sustainable urban fabric than much needed housing.
- slg 9y ago
  When was the last time you were in DTLA? There are many new buildings that weren't built in former parking lots and the gentrified area isn't purely centered around LA Live. You can walk 10 minutes south or west of the Staples Center and be in non-gentrified areas but if you walked 30 minutes north it is heavily gentrified.
Decade 9y ago
About 10% vacancy seems to be a healthy amount. If that were over the entire city, and not only in new developments, then people would have much more freedom to move. And then prices would go down. 100% occupancy is bad, because it means the city is not flexible to changing demands. Fill up that new development 100%, and then the next person who needs to come in would need to double up, or bid higher and displace somebody. That is my big problem with the Planning process, trying to manage growth. It’s slow and brittle to unanticipated changes.
- slg 9y ago
  It isn't over the entire city, it is over a small neighborhood within the city. The vacancy rate in that neighborhood was at 12% while the entire city rate was at 4%. That plus the rate being at a 17 year high would seem to indicate a problem. [1] [1] - https://la.curbed.com/2017/9/15/16316040/downtown-la-high-vacancy-rate-rent https://la.curbed.com/2017/9/15/16316040/downtown-la-high-va...
  - mjevans 9y ago
    Yes it does. The problem is lack of supply in the overall market to drive the price to a reasonable point.
closeparen 9y ago
The whole point of a market is that capital is most incentivized to come alleviate a shortage when prices are highest. There might be a cogent argument for fully centrally planned housing, but instituting price controls on new market supply when a shortage is at its worst is a staggeringly clueless demand. And let’s be clear, affordable vs luxury housing is about price controls, not the units themselves. There is nothing physically embedded in the average “luxury” 700sqft unit that makes it worth more than a McMansion in Iowa. Only the supply and demand situation where it’s located. Countertops and dishwashers don’t add +$2000/mo.

altria 9y ago

Saving for retirement is hard due to the government's inflationary policy. The returns on savings accounts, bonds, or other traditional savings vehicles are untenably low. Thus, every Mom and Pop is thrusted into speculative investments such as the stock market or real state. Small wonder then they seek to protect their home equity. It's largely their only retirement plan.

morio 9y ago
It's the other way around. A deflationary economy forces the feds to lower interest rates to encourage lending. We've had record breaking low inflation rates for a decade now. A 'healthy' inflation rate would be in the 3.5-4.0% range. Yes, money is supposed to lose value. If it did not no one would spend.
- adrianN 9y ago
  People would still buy things they need. They might not buy things they don't really need, but that doesn't sound like such a bad thing to me.
- megiddo 9y ago
  That's nonsense. There's no objectively healthy inflationary rate. Low interest rates are the key factor in driving demand for borrowing. Low interest rates signal a healthy supply of savings from which to borrow. So, low interest rates naturally match a large supply to a healthy demand. Such a scenario would create a market for investment-led expansion. High interest rates signal the opposite. Either the supply of available savings is insufficient, or relative demand is high enough to drive out uncompetitive demands for savings.

alexasmyths 9y ago

"regulatory hurdles" those may be in place because the citizens want it that way, which is kind of their right.