November 17th, 2021 (LOS ANGELES, CA). As the price of housing continues to surge in cities across the country, the middle class is being left behind, with the supply of affordable homes falling far short of current demand.
In Los Angeles County, the median price of a home increased 12% annually to a record $795,000 in September – far above what an average household can afford, estimated to be approximately $300,000 based on the County’s latest estimated $73,000 median household income.
To tackle this dilemma, a new coalition of leading public and private organizations in the community and housing development industry has recently formed to launch ‘The Essential Housing Campaign’, organized by The Housing Innovation Collaborative (HICo), the Los Angeles-based nonprofit housing R&D organization, in partnership with the Southern California Association of Governments (SCAG) and the Urban Land Institute (ULI).
‘…130,000 new middle-income homes by 2030…’
The goal of the new Campaign, running now through 2030, is to build 130,000 new homes throughout Los Angeles County, priced to be affordable to residents earning up to 120% of the area median income, using limited public subsidy.
“While there are many obstacles ahead, this essential, middle-income housing can be built in the Los Angeles region using existing private market funds, existing construction methods, and existing available land – we just need the policies and incentives in place to encourage more equitable housing development,” said Charly Ligety, Director of HICo.
“The Los Angeles region is not building housing for middle-income workers anymore – many nurses, teachers, firefighters, public safety, transportation personnel, among other essential workers, cannot afford to live in the communities they serve,” said Ligety. “If left unchecked, this housing affordability problem for middle-income workers is projected to get worse,” he continued.
This phenomenon, known as ‘the missing middle’, is present in many high growth cities around the world where supply of new homes has not kept up with demand and most new development is priced only for the highest end of the market.
“If we continue building only high-end housing and no middle-income housing, our communities will continue to be hollowed out – we are seeing neighborhoods with fewer families, shrinking public schools, employers leaving the region, and more people driving from further away to carry out the essential work of our city – it is not a sustainable model,” said Ligety.
“…If left unchecked, [this housing affordability problem] is projected to get worse…”
Based on the latest projections by Los Angeles City Planning (table below), only 1,000 new homes for middle-income workers are expected to be built by 2029, less than 0.5% of all future housing development. The projected number is consistent with recent development trends in Los Angeles – since 2014, only 827 units of more than 117,000 new homes built in the City were affordable to the middle-income segment.
The call to action to build an unprecedented 130,000 new middle-income homes is joined by local and regional political leaders.
“Our essential workers are the foundation that keeps our city running, and this new pledge to create affordable housing in the communities they serve will help ensure they can access prosperity,” said Los Angeles Mayor Eric Garcetti.
The Southern California Association of Governments (SCAG) – the nation’s largest metropolitan planning organization – is also helping lead the effort.
“The Southern California region, like many other parts of the state, is facing a housing crisis unparalleled in our state’s history. Providing tools and developing new approaches to affordability and public-private collaboration will be vital in our efforts to build middle-income housing projects throughout the region,” said Clint Lorimore, President of SCAG.
“…Our essential workers are the foundation that keeps our city running…”
The goal of 130,000 new homes by 2030 is based on a timeline set by California’s latest state-mandated housing production goals, which went into effect in October and runs through the end of 2029.
The coalition has been working on a comprehensive action plan, and has already hosted more than 30 public presentations of solutions in the housing development space that can be deployed, ranging from proven approaches to zoning – such as allowing more walkable, middle density infill development (similar to allowances made under California’s recently-passed SB 9 and SB 10), utilizing the 14,000+ publicly-owned land parcels and thousands of other privately-owned, vacant parcels throughout the County more efficiently, building with faster, more cost-effective design and construction methods (similar to those used in Europe and Asia), and new financing methods (such as social impact funds or internal subsidization) that have achieved affordability with limited or no public subsidy.
“The Essential Housing Campaign presents the unique opportunity for scaling equitable community development,” said Byran Barker, Director of Citi Community Capital. “Los Angeles County is the 18th largest economy in the world – the region has the resources to solve the ‘missing middle’ housing shortage with creative approaches to policy, finance, and construction methods – ultimately, the success of the Campaign depends on our ability to collaborate and take action.”
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For more information about The Essential Housing Campaign, visit housinginnovation.co/essential. Stay updated with the Campaign’s upcoming releases and other HICo programs by subscribing to HICo’s weekly newsletter at housinginnovation.co/subscribe.
The Housing Innovation Collaborative (“HICo”) is a solution-oriented, non-profit housing R&D organization based in Los Angeles, CA, focused on accelerating the next generation of design, finance and policy to address the housing crisis. HICo’s groundbreaking online platform – at housinginnovation.co – has been used by cities across the country to address homelessness and natural disaster recovery. HICo’s prior work has included creating the world’s largest open-sourced database of rapidly deployable emergency shelter solutions in partnership with FEMA and HUD. Its research was recently published in U.S. Housing Department’s national journal, Cityscape (link).