During a recent conference exploring the worsening housing crisis in California – focusing in part on the growing disparity between rising housing costs and household incomes – one panelist wondered why the situation is repeatedly referred to as a crisis, “but we’re not acting like it.”
“During the [COVID] pandemic I was so inspired [by] the way that leaders stepped up in an emergency,” recounted Rudy Espinoza, president and CEO of Inclusive Action for the City, a non-profit organization in Los Angeles that serves underinvested communities with small business loans and other resources. “The mayor at that time commandeered public facilities to house the unhoused, [and] the LA County Department of Public Health even said, ‘We’re not going to bust street vendors during this time – we’re in a crisis.’”
In addition, he noted, millions of dollars were poured into small businesses via grants.
“This happened during the last 10 years,” said Espinoza. “We acted differently in [that] crisis.”
“It wasn’t just the county, it wasn’t just the city; it was all of us coming together alongside the state and federal governments,” agreed Tracy McAulay, director of housing solutions for the County of Ventura, describing it both as inspiring and proof that “we can make a difference.”
Jamshid Damooei, executive director of the Center for Economics of Social Issues (CESI) at California Lutheran University in Thousand Oaks, agrees that it would take a collective and sustained effort by multiple entities choosing to work together to address the growing crisis.
“The way decisions are [being] made, it just seems impossible,” acknowledged Damooei. He said current economic trends make it increasingly difficult not only to buy a home, but even to rent a decent apartment. Nearly 60% of LA County renters are rent-burdened, paying over 30% their income on rent and utilities, and many are severely rent-burdened, spending more than half.
“We need … people to come together to [work towards] an inclusive economy,” he said.
Damooei, other speakers and panelists addressed this topic and related issues during last week’s conference at Cal Lutheran – “California’s Housing Crisis: Roots of the Problem and What Lies Ahead” – and discussed highlights from a newly released 154-page report by the same name.
Roots of the Crisis
The roots of the housing crisis go back at least 50 years, according to Damooei. Two significant factors are wages and changes to the tax system. Since the late 1970s, the gap between a typical company’s productivity and the wages they pay their employees has widened steadily, especially for production and nonsupervisory workers, who make up about 80% of the U.S. workforce.
In short, said Damooei, wages haven’t kept up with increasing living expenses, especially for housing. Since 2000, incomes have increased only by 9%, while rents have gone up by 40%.
With less disposable income, people often accumulate debt, such as student loans and credit card debt – not necessarily solely for luxury items, he noted, but often also for necessities, such as utilities. And the more debt a person has, the less likely they will be able to purchase a home.
In 1980, 39.5% percent of people ages 25 to 35 could afford to buy a home, said Damooei. Today, only 15.5% of people in the same age range can buy a house, and millions never will.
“Over the past 50 years, tax rates have increasingly favored higher-income earners,” stated the report regarding tax system changes. “The bottom line is that our income distribution and the actual tax burden on low- and middle-income Americans, [including] Californians, are primarily influenced and determined by those with greater wealth, influence and political power.”
“We [still] have a middle class, but middle income [households] have become disadvantaged,” said Damooei.
Another factor impacting housing prices, especially rentals, is the influx of corporate ownership.
“We have had an incredible increase in corporate acquisitions of housing for rentals. … Housing is becoming a commodity rather than a necessity,” Damooei said. “It’s important to pay attention, [because] housing is a human right. It’s not something that should be commodified.”
“I want everybody to walk away from here realizing that it’s not their fault that they can’t afford their rent, and it’s not their fault that they’re having a hard time staying in the community that they invest in every single day,” said Espinoza.
Other deterrents to affordable housing include restrictive zoning, high construction and labor costs, and NIMBY-ism (which stands for “not in my backyard”). This refers to residents in certain neighborhoods rejecting proposed developments in their communities, even if they approve the project in theory. The impact of NIMBY-ism can be significant and far reaching, explained Damooei. Blocking much-needed lower-income housing projects, for example, is essentially the “rejection of community members … [leading to] segregation mainly driven by income, which also fosters [further] division based on race and ethnicity within society.”
Working Together Towards Solutions
Lucas Zucker, co-executive director at Central Coast Alliance United for a Sustainable Economy (CAUSE) in Ventura, said the housing crisis didn’t happen randomly from one day to the next.
“It didn’t happen by accident; it was created by policy,” said Zucker. “It was created by decisions made by folks in power. And all policy is driven by politics, and all politics is driven by power.
“We can have conferences and [discuss] what kinds of policies and economic structures would be necessary [for] more affordable housing,” he added. “But, ultimately, it doesn’t get outside of rooms like this unless someone is there, actively building the coalitions [needed] to create the power to get it done. … We need to build broad coalitions … to get some policy breakthroughs.”
Zucker believes social housing would offer a long-term solution for “people facing threats to their survival, [who] need immediate protections so that someone cannot just come and buy up their building, evict everybody – all the families there – and double the rent overnight.”
Damooei agrees social housing would help curb the housing crisis. Most common in Europe, social housing is typically non-profit, government-backed affordable housing for low- to moderate-income individuals or families, with rents based on income or operating costs instead of market rates. In the U.S., subsidized housing would be the closest comparison. In lieu of full rent from a tenant, a landlord accepts partial rent from the tenant and a housing voucher funded by the U.S. Department of Housing and Urban Development (HUD) for the balance.
Unfortunately, said Damooei, in LA County only 10 percent of residents eligible for housing vouchers receive them due to lengthy, multi-year waiting periods because of limited funding.
“We need the government [and] nonprofits to enter the market and build houses [to] change the dynamics of the market, because, the way we are going now, the market is going to be dominated by large corporations, and they will do whatever they can to take advantage and maximize their profits,” he said.
Espinoza said he sometimes feels hope for the future of housing in California. For example, about a year ago, following the LA fires, “people were worried about speculation in Altadena.”
“The governor signed an executive order that said, … ‘We don’t want investors coming in [to buy] and low-balling folks who were victims of the fire.’ And he put out a freeze on low-ball offers for three months,” said Espinoza. “So there was … a leader saying, ‘Hey, we can shape the market here. We don’t have to allow this to happen.’
“There are signs of hope, there are glimmers of the answer,” he added. To achieve an inclusive economy, in our communities and in our country, said Espinoza, we need to have “tough conversations” about sharing power, resources and governance. “We still have work to do.”