Need for Affordable Housing and CFLT’s Role

In 2007, Harvard’s Joint Center for Housing Studies ranked Los Angeles’ housing “as both the least affordable and most crowded” of the 50 major metropolitan markets it studied. Despite the recent drop in home prices, the unmet need for affordable housing in Los Angeles County remains tremendous.  Although the median home price has fallen to $297,000, still only 46 percent of Los Angeles area residents earn enough to be able to buy a home. 

The average rent in Los Angeles is $1,704. The 2006 American Communities Survey estimated that about 448,000 households in Los Angeles paid 50 percent or more of their gross income for rent.  Often that degree of housing cost burden means that families are unable to fully meet their other needs for food, transportation and health care.

The consequences of this housing crisis are wide-ranging.  A majority of the residents are in transient mode. Forty percent of families with children are renters. Children must change schools often as their families move to find affordable and livable housing. While renters face the greatest affordability challenges, homeownership is out of reach for many families because of high housing costs.

It is difficult for families to plan for college, to start businesses or save for retirement when half of their monthly income goes toward housing costs. Fewer than one in four families owns a home in most of the neighborhoods the California Community Foundation serves, making it difficult to build a civic infrastructure.

To respond to the crisis, local governments in Los Angeles currently allocate more than $200 million per year to subsidize production of decent affordable housing, both rental and for-sale units. These developments rely on a patchwork of federal, state and local subsidies and incentives to make high-cost housing affordable to lower-income families. CFLT can be instrumental in significant ways:

• Current resale restrictions are not strong enough to ensure that the second buyer of a home can afford it without significant subsidy, given the mechanisms used to create the units.
• CFLT’s involvement can make it easier to use stronger restrictions by ensuring monitoring and oversight of the sale process.

• Los Angeles must compete for state programs, such as the Multifamily Housing Program (MHP) or the Low Income Housing Tax Credit Program. Los Angeles County is home to 28 percent of the people in California, and to 40 percent of the people in poverty, and yet it received less than 25 percent of the state funds allocated since 2002. The combination of high land costs, slow entitlement processes and lower incomes make it easier for developers to seek affordable opportunities elsewhere.
• CFLT can help by creating a pipeline of development opportunities in targeted neighborhoods.
• CFLT has the ability to test innovations and partner quickly to open opportunities otherwise unavailable. The combination of internal capacity and access to capital makes it possible to take higher risks that can demonstrate new approaches.
• CFLT can assemble and direct the capital needed to work at size and scale, make a visible impact in a neighborhood and attract private partners and national foundations.