(Read more on the multifamily market.)
LOS ANGELES-Two questions dominated the Los Angeles Business Council's Mayoral Housing Summit that was held on Oct. 17 at UCLA's Anderson School of Management: “How can we afford to build work force housing?” and “How can we afford not to?” The first question was easy to answer. Further housing development has virtually halted as homebuilders scramble to unload their excess supply to a population who can no longer qualify for a mortgage.
The second question was not as straightforward, however, as Kevin Ratner, president of Forest City, pointed out during the Reasons for Optimism: Preparing for the Economic Upswing panel. “It's the Fed rate. Deals require a lot more effort now,” he said. “And construction costs, though they have come down, are still really high, so at the end of the day it's all about finding the gap to deliver affordable housing. Right now that involves innovative practices.”
Dan Palmer, a fellow panelist and president of the Las Lomas project, a master-planned community in the north San Fernando Valley, agreed that although times are tough all is not lost for affordable, work force housing.
“Over the long term the fundamentals are very strong for [Southern California],” he said. “Today we're finding more people ready, willing and able to work. When you work on a long-term…scale, events like the current market climate are to be anticipated. We expect there to be cyclical variations. The market is going to recover and we're going to get the benefit of more favorable [conditions].”
Keynote speaker and Los Angeles Mayor Antonio Villaraigosa used the conference to broadly outline his five-year plan to alleviate the need for affordable housing. The issue is of great concern to the mayor's office as Los Angeles is more than 250,000 housing units short of fulfilling its current need. This is compacted by the fact that California's population is due to hit 60 million by 2050–13 million of which are anticipated to live in Los Angeles County.
“My five-year housing plan is [based on the idea that], as we've grown up, it's time to have a grown-up conversation about the gravity of affordable housing in Los Angeles,” Villaraigosa said. “We need to insist on a more intelligent design. Some housing plans have not been updated since the '30s. We need to start in South Los Angeles where opportunities for jobs and homes are the greatest.”
Part of the mayor's plans for South Los Angeles and the rest of the city include transit-oriented development, streamlined entitlements and a pilot program for second-year teachers that would allow them to buy homes closer to where they work.
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