“Does anyone know how many new luxury apartments in LA go online and then sit vacant every month?”
This was a candid question posed by a thoughtful man named Mark Horvath who also happens to be the founder of Invisible People.
It was my favorite kind of question – one that is rarely asked and even less frequently answered. It’s a question that leads inevitably to more questions. It causes the asker to go on a deep dive via the internet and emerge with a novel’s worth of statistics, many of which leave room for interpretation. In other words, it’s the kind of question that keeps you up at night.
After it was asked, not only did I feel I had to learn the answer, but I also felt an urgent responsibility to share whatever information I uncovered with our readers – advocates, and skeptics alike.
The luxury apartment rental craze plays a massive role in the California affordable housing crisis. In turn, the housing crisis is largely to blame for the homeless crisis. But this isn’t a circular problem with no end and no beginning. In truth, the problem is more like a maze. It does present with a point of entry, but it’s just really easy to get lost in.
The Point of Entry is Unaffordable Homes. Let’s Start There.
Unaffordable homes, sometimes referred to as luxury rentals, are built with the upper crust of society in mind. They feature on-trend architecture, up-to-the-minute amenities, and, of course, hefty price-tags to match.
These rental properties are all the rage in downtown LA, a region that reins as the US epicenter of homelessness. It happens to also be a place we’re being led to believe is not constructing new homes. However, a riveting report released by the ACCE Institute revealed that:
“We are building homes, but only for the rich.”
Sadly, 97% of all rental unit construction underway in the area consists of four- and five-star luxury establishments. Upon completion, big real estate companies, powered largely by investment entities, intend to charge an average rental rate exceeding $2,800 per month. This seems ludicrous in a city that’s short half a million affordable homes. And much like the aforementioned “investment entities” this story only gets richer…
Vacant Lots and Vacant Lands Bring More Despair to a City Engulphed in Flames
To answer the initial question that started this post: there are approximately 46,000 luxury rental units being held in a state of “non-market vacancy”. Tens of thousands more are listed but not moving because they’re entirely too expensive.
The grand total of vacant dwelling spaces, according to Design and Architecture host Frances Anderton, is in the ballpark of 100,000 units.
In the eyes of property owners, there is no real sense of urgency in filling these units with tenants. Why? Because they can simply sit there vacant until the price is right. This process is known as speculation and it is gaining popularity in the real estate market. Rather than incur a financial penalty for having empty homes in a region notorious for homelessness, these investors are financially rewarded for holding out and essentially hoarding the vacant rental properties.
It gets worse, as these question trails often do. Investors are also stocking up on vacant land. To be precise, they currently control 22 square miles of Los Angeles. This is property that now cannot be used to construct affordable homes. In total, there are more vacant luxury rentals in LA than there are people experiencing homelessness. Yet even in a land full of empty houses, the unhoused are only offered empty promises.
This Problem Belongs to the Nation, Not Just the City. Not Just the State.
As Angelinos continually migrate from California due to lack of affordable housing, people in other states all across the nation face unprecedented housing issues of their own. Why? Because native Californians who can’t afford to live in rental units in LA have way more to splurge on rents and mortgages than natives in other states. This has become a serious issue for people residing in states where they are outbid by out-of-towners.
Negative Migration: In 2018 Alone, 691,321 Californians Fled the State in Search of More Affordable Housing Options
The overwhelming majority of these migrants relocated to Texas. Their very presence created competition in a housing market that once featured a lot more opportunity. For this reason, there is now a well-known anti-California backlash taking place in the Lone Star State and other states like:
- New York
In a move now being referred to as the Great California Exodus, middle-income-earning families are departing their native state of California, leaving behind a rich but fruitless land that is full of empty luxury apartments and toxic wildfire smoke. Their arrival in other parts of the nation is met with a great deal of hostility as new markets become too competitive and average working families are priced out from state to state.
Nobody Deserves to Be Homeless
In our current condition of emergency, tens of millions of Americans are on the brink of homelessness, most of which is a direct result of corporate greed and wealth inequality. If you’re a LA, California resident, talk to your local lawmakers about enacting a vacancy tax to punish investors for hoarding land and property. These components are essential just like air and water. Without them, homelessness will always prevail.
If you’re outside of California, remember to tell your legislators that you’re expecting more affordable housing, rent relief, and moratorium extensions.