SoCal's housing crisis: 'Either rents go up or we build more units'
Inglewood will boom, Millennials should keep an eye on the homes of Boomers, and other advice and predictions from two experts on the economy and real estate.
The cost of living in Southern California is going to soar and no neighborhood is safe from rising rents and home prices.
"You have two options: either rents go up or we build more units," says economist Chris Thornberg, co-author of a new report from USC's Lusk Center for Real Estate.
He argues that policies and movements against dense developments will only exacerbate California's housing crisis.
"Because you didn't build those 2,500 high-end units," he says, "now those 2,500 families who can afford to live in [places like San Francisco] are going to gentrify one of your cherished working class neighborhoods."
"Part of our challenge," say co-author Raphael Bostic from USC, "is to create a narrative about who we are as California that acknowledges that it's the burden of prosperity, it's the burden of success that we all need to bear if we're going share in prosperity."
In a panel hosted by A Martinez on the release of the report, Bostic and Thornberg offered their own advice and predictions to the audience of real estate and housing professionals.
The next gentrifying neighborhood: Inglewood
"Inglewood is about to go leaping forward," says Thornberg. "It's the only place on the Westside that hasn't started to gentrify."
"There's very few places to still build, and that's one of them," he adds. The report shows that rents in the area are starting to climb as well.
Bostic says that if people are concerned about developments bringing congestion and traffic, it will happen anyways.
"There is a cost," he says. "That building's going to go up somewhere else, and those people are still going to want to come to your community."
The only difference is that people will be driving in to the area instead of walking or biking.
Southern California IS affordable
People are able to afford living here, says Thornberg, otherwise vacancy rates would be high, not low as the report shows.
"As much as rents have come up, affordability has improved," he argues. "There are fewer people rent distressed today than there were four years ago." He cites sharp job and economic growth in the state as proof: more jobs means higher wages that people can use to pay their rent or mortgage.
But Thornberg adds that he's worried about a specific group of people: the middle class.
"I don't look at lowest income households because they have affordability problems no matter where they live," he says.
Middle income Californians, however, are able to afford moving elsewhere where their income goes further. When they go, they take an important sector of the economy with them.
Where can millennials live? Look to boomers
"However you're housed at 70," says Bostic, "you're not moving somewhere else."
He says that millennials looking to buy their first home should keep an eye on what boomers do in retirement.
"What are the boomers going to do when they're 70 years old for housing?" adds Thornberg. "Are they going to be downtown, are they going to stay in their original house?"
"If boomers want to move, they actually need someone to move into their home," says Bostic.