Economy
Human beings need a roof over their heads. Without housing, it is difficult for people to be productive members of society, if not survive. Access to affordable housing is essential to social living, or what is commonly referred to as civilization. It should therefore be considered a human right. In California, the cost of housing has gone up precipitously, particularly in San Francisco and Los Angeles, and other coastal cities, resulting in a housing crisis without historic precedent. It doesn’t have to be that way. In fact, the lack of affordable housing is an artificially created problem . . .
California’s housing problems are largely a legacy of an outdated land use planning model dating back to the post World War II economic boom. At that time, after the defeat of Germany and Japan, the United States controlled the majority of the world’s industrial production. Never in history has a country experienced such a time of prosperity as that which followed from 1945 to approximately 1960 in the United States. Soldiers returning from service in WWII were supported by the G.I. Bill, which provided them with subsidized education, low cost mortgages to buy houses, and loans to start businesses. Affordable mortgages spurred a boom in new home construction, which also provided jobs . . .
For many early European immigrants, the United States offered the hope of starting a new life free of the institutionalized inequality of Europe, which was a legacy of feudalism. In the case of England in the 18th century, hereditary landlords took over what had been common land through the process of enclosure, which prevented peasants from making a living growing crops, grazing livestock, hunting and fishing. Enclosure was an illegal land grab sanctioned by Parliament to help landlords establish private title to former common land . . .
The modern form of homeowner or landlord enclosure of property manifests itself (much like the collusion between landed gentry and Parliament in England during the enclosure movement), through the control of government, which determines planning policy, abetted by a zoning code that separates land uses and promotes low-density housing and automobile transportation. At the city level across coastal California, homeowners consistently oppose growth in their communities. The construction of fewer new units has the result of keeping property values and rents high. Landlords are invariably homeowners; so through high property values and rents, they benefit twice from the status quo, no-growth planning model . . .
The economic collapse of 2007 left many Americans with mortgages they couldn’t pay, as a result of predatory lending practices, the packaging of high risk home loans into salable securities, housing speculation by opportunistic homeowners, and finally due to people living beyond their means in order to keep up with the Joneses. When it became clear that mortgage-backed securities were junk assets based on housing debt that people couldn’t pay, the market collapsed, leaving many people either underwater in their homes, or foreclosed on. Those who lost their homes went into the rental market where landlords responded by increasing already high rents . . .
California’s rental market has always had its share of slumlords renting substandard units for premium prices for years and even decades with little or no maintenance or improvements. These predatory landlords get away with it because there are no basic quality standards for rental housing, no regulation and/or no enforcement of regulations in the private rental market. The result is pervasive slum housing . . .
In spite of claims of a recovering economy, GDP growth in the United States decreased to 1.9 percent in the fourth quarter of 2016. New job creation has also disappointed, consistently coming in lower than predicted. And although recent figures are higher, many, if not most of these jobs are low-paid, often part-time or seasonal work. If we look at GDP in particular, we can see that a few industries have in large part driven the minimal national growth reported. Meanwhile, the economy continues to be supported by unsustainable household debt . . .
The greatest drag on the economy today is the capture of excessive rents by the property class. Unlike they claim, the rich do not create jobs. As landlords and speculators, they live off of the hard-earned income of their tenants. The money that would have otherwise been spent on goods and services by tenants is in fact removed from the productive economy by owners and saved, put into property, or used to speculate in the stock market. Although long-term value investors still participate in the market, they are increasingly rare, as stock valuations no longer represent or reflect the productive output of listed companies. The market today is one of various forms of conflict of interest, insider trading, short-term positions, high speed trading, and fee-based brokering which leaves the average investor holding the bag. Like the rental market, it is another wealth transfer system from the disappearing middle class to the wealthy property and capital class . . .
Airbnb is doing to the rental market what Uber has done to on-demand transportation, and what social networks have done to human relationships, namely inserted itself as a middleman profiting on the exchange of its users. What Airbnb does is turn everyone with an empty room into a landlord, while allowing existing landlords to rent their units in smaller time increments and at a higher cost per increment. While this encourages a more efficient use of housing resources, it also has the consequence of reducing the number of long-term rentals on the market at any given time, in spite of the fact that there are certainly landlords who will only rent out rooms short-term and/or intermittently, who did not rent rooms long-term (month-to-month or yearly) before. The Airbnb model is nothing new. In tourist towns, this type of rental has always been available, via a sign posted outside an apartment or on Craigslist . . .
Landlords charge what they can get away with in rent, and they seem to have discovered that in prime markets (where all the jobs are), they can now take most of a tenant’s paycheck without protest, due to a lack of regulation and enforcement. As with any cartel, informal or not, their monopoly over a resource grants them power that they will not relinquish without intervention. It is therefore the role of government, at the national, state, county and municipal levels, to develop straightforward and simple policies, standards, and regulations for rental housing, which are grounded in reality and backed by robust enforcement. Municipalities must also allow for and promote more centrally-located, mixed-use, multifamily development. Renters, who make up the majority of households in most, if not all, coastal California cities, need to organize and petition local government to build more housing that is sustainable and affordable . . .
To help solve the rental housing crisis in California and elsewhere in the country, municipalities need to create a rental housing inventory, requiring all landlords to register their rental units with the city. These units should then be assessed to determine their fair rental market value, much as housing values are assessed. This assessment would take into account the age of the unit, its size in square footage, the amenities it includes and their condition, any improvements made, and basic health and safety standards. For units that do not meet health and safety standards, landlords must make the required improvements in order to rent them out. Also, municipalities should encourage renters to report landlords renting illegal, unsafe, or substandard units. Much as housing is red-flagged for not complying to code, so should rental units be flagged in the register and be barred from being rented until improvements are made . . .
Aside from ensuring the rental market is regulated, and that in determining affordability rents are accurately linked to income, regional government bodies such as the Southern California Association of Governments (SCAG) and the Association of Bay Area Governments (ABAG) need to have more authority to spread development throughout the cities of Greater Los Angeles and the Bay Area. Currently, though these regional government agencies publish housing assessments, such as the ABAG Regional Housing Need Allocation (RHNA), local municipalities, particularly low-density suburbs, continue to obstruct and prevent the construction of new multifamily housing in their communities, forcing other municipalities and the rest of their region to take up the slack . . .
Renters make up a majority of the households in many, if not most, of the cities in coastal California. According to the 2010 Census, 57% of the households in Los Angeles and 56% in San Francisco were renters, which gives them considerable leverage in advocating for affordable housing in their communities. Renters need to organize themselves politically and pressure local government to provide affordable housing and approve the construction of more mixed-use, multifamily, sustainable housing by the private sector . . .
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