LA might be considered a global city, but it is facing concurrent, overlapping problems and has been since before the COVID-19 pandemic. Falling transit ridership, rising rents, falling K–12 enrollment, a rising median age and increasing homelessness all threaten to jeopardize the productive dynamism and openness that defines major global cities. These trends may have taken a long time to manifest, but they are very real, and our leaders would be aloof if they ignored or otherwise downplayed the severity of these current and future problems.
It’s tempting to throw up our hands. “LA is a city whose time has passed,” a more jaded and cynical version of myself might say. However, unlike other declining cities like Detroit and Cleveland, we have something special — high demand, in part fueled by a desirable climate. There is still hope to save LA from these problems, if we are willing to be bold.
The central thread of many of these problems is our housing shortage — there are simply not enough housing units (at any price) to meet demand to live here. Low and falling transit ridership is in part due to a lack of population density around transit stations. Falling school enrollment is in part due to high housing costs keeping people from having children and moving into desirable neighborhoods, and rents are going up because of this shortage.
A multitude of factors contribute to the housing shortage, but one of the primary reasons is that, at the moment, many new housing developments have to go through a long, discretionary approval process. This process stalls development and privileges procedural knowledge over building outcomes, preventing the creation of a large-scale, competitive construction sector that brings down costs for all of us.
If an airline spots an opportunity to offer a different route to a destination, it does not need to obtain government permissions before being able to offer this option to customers. This used to not be the case — until the Airline Deregulation Act, all airlines had to have their proposed routes and fares approved by the Civil Aeronautics Board (CAB). The CAB did not control airline safety (which was worse before deregulation compared to today), nor did it ensure low costs for travelers — it was used by legacy airlines to halt competition and keep prices high. After deregulation in 1978, airlines were forced to compete on routes and fares, which led to airfares falling in half. Air travel went from a luxury to a widely affordable service.
To solve our housing shortage, we need a revolutionary shift in our approach to housing construction, similar to the revolution in affordable air travel after deregulation.
One of the main issues facing a simplistic slogan like “end the housing shortage” is that housing markets are dynamic processes that take time to adjust — digging ourselves out of a 50 year shortage isn’t easy. It’s tempting to give up right now, but a paradigm shift in housing is instrumental to creating an LA worthy of global city status, and very worth doing.
Right now, LA is a very sprawling region — approximately 75 percent of residential land is zoned for detached single family houses on large lots. The housing stock is old, which comes with increased maintenance costs and risk of damage during earthquakes. Additionally, the shortage of inventory means seniors lack accessible options to downsize, young families cannot find starter homes and newcomers can’t find affordable places to rent.
An idea pioneered in Greece would allow a homeowner and a developer to agree to a land exchange development arrangement — namely, the homeowner offers their land which the developer builds an apartment building on, and the homeowner receives a condominium in the new building. This system offers multiple solutions — senior citizens can downsize and remain in their communities, young families can find more starter homes in desirable neighborhoods and the construction industry grows in size and competitiveness.
A few laws should be repealed, replaced or modernized in order to facilitate this kind of development, such as restrictions on unit density, floor space, parking and the discretionary approval process. With the right laws, policies and mindset, LA can create a thriving industry for this practice.
LA has undertaken major transformations to its housing stock before — after the Northridge earthquake, LA created a program to retrofit and reinforce soft story apartments (among the ones that hadn’t collapsed during the earthquake) and has seen great success. On virtually every telephone pole, you can find contact information for a contractor who will do soft story retrofits. In an ideal world, those telephone poles would also include contractors for land exchange developments.
It’s an ambitious idea, for sure, but we need more of them. The city is nibbling around the edges to deal with the problem — a few apartments here, an ordinance there. We need true mass production and competition if we really want to pummel this housing shortage — and land exchange is a major step in the process.