New Construction Alone Won’t Stop L.A.’S Housing Affordability Crisis

New luxury apartment homes are sprouting up throughout Los Angeles – in the heart of Koreatown, Little Tokyo, in City of West Hollywood , City of Glendale, CA , City of Culver City , even downtown. Amid all the new construction, the need for more affordable housing continues to grow.

From 2010 to 2019, the City of Los Angeles lost thousands of homes considered affordable for low-income households, according to the news site LAist .?Over the same period, a much smaller number of new affordable homes were built – leaving a net loss of homes affordable to low-income households.

City planners say that gentrification explains the loss, with rent increases outpacing the wages of low-income workers. Market conditions have driven up rents as the housing shortage builds competition for available spaces with middle-income renters winning out because they are willing to pay more.

New construction alone is not doing to solve the situation. The Southern California Association of NonProfit Housing (SCANPH) in 2021 released a report stating that Los Angeles County faces a shortfall of 500,000 affordable rental homes. At the time, a household would have to earn at least $38.23 per hour to afford the region’s average rent of $1,988 per month.

According to the city housing element, Los Angeles in 2021 had 71,057 affordable housing units. Between 2017 and 2019 the city approved 58,437 new market-rate units and 10,877 new affordable units. About 20% of the city’s new Transit Oriented Community units are tagged for extremely low-income residents earning $31,300 or less for a household of four, the city Planning Department reported in a 2022 blog post.

A ’quicker, cheaper’ solution

Publicly announced strategies to deal with L.A.’s housing crisis overwhelmingly focus on new construction as the solution. But the USC Sol Price Center for Social Innovation says the city’s current stock of older, more affordable housing is in many ways a more practical and economical way to help remedy the situation. It is “quicker and cheaper than constructing new housing units and relies less heavily on government subsidies that tend to lengthen the development process,” the center’s website states.

Why not repurpose, rehabilitate, and retrofit older structures that already provide the bulk of the city’s more affordable housing stock? And because many of these structures, particularly older apartment buildings, can be highly vulnerable to extreme damage from earthquakes – a part of those improvements should include structural safety.

The center recently produced a case study examining the Normandie Lofts building in L.A.’s Koreatown neighborhood as a Naturally Occurring Affordable Housing (NOAH) project, showing both financial and social returns for renovating the five-story, 50-unit building. Normandie Lofts is located in the heart of Los Angeles’s Koreatown neighborhood, just to the northwest of Little Bangladesh. Conversion of this five-story property to a NOAH project was a “secure and triple-bottom-line real estate investment with overall high occupancy rates (low vacancy rates) and downside protection from real estate cycles, in addition to risk reduction for low vacancy periods as it is expected to have a pre-qualified tenant waiting list, the study found. In other words, NOAH projects are a dependable investment, immune to the ups and downs of typical real estate cycles.

The USC study demonstrates conversion of existing older properties for affordable housing can be a lucrative investment. It also helps from a social and economic standpoint by providing valuable housing to people, who help to support the local economy as consumers and members of the workforce.

Disadvantaged are most at risk

There are thousands of these NOAH properties throughout California’s urban communities. Many of these older structures will likely need to be retrofitted for safety against earthquake damage. Recent reports have indicated 60,000 apartment buildings in California may contain soft and weak first stories, which may collapse in major earthquakes.?These wood-framed structures, with parking on the ground floor and units built above, can be seismically retrofitted to withstand even a major earthquake for as little as $7,500 per unit – a stark contrast to the $500,000 to $700,000 per unit for new, affordable housing in California. The NOAH units, in other words, can be converted to safe, affordable housing for as little as 1/100th?of the cost of building new units.

Building safety and affordability should not be mutually exclusive. But when it comes to earthquakes, older structures encompass the bulk of any city’s most dangerous buildings, which are generally used for housing or for lower-wage commercial operations such as manufacturing, logistics and service-related industries. These structures, because of their age, are more affordable to rent. That puts lower-income residents themselves at a greater risk of injury in a quake because they live – and work – in these buildings. It also increases the risk of these vulnerable populations being displaced by a disaster leaving fewer options for affordable housing.

Building owners can help by ensuring that their investments will stand strong in a major quake – so they will continue to provide the income they depend on – and will remain ready to provide the vital service of shelter to the community in a desperate time of need. That level of security can only emerge when building owners have resources available to help fund these improvements.

If you own a building that you believe may be vulnerable to damage – or if you live or work in one – it’s important to educate yourself on cost-effective measures that can be taken to save lives, protect property, and preserve the well-being of the community-at-large. Visit?optimumseismic.com?for more information, or call us at 323 978-7664.

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More about the author, Ali Sahabi, GEC, MRED : Recently appointed to Los Angeles Mayor Karen Bass’ Transition Team, Ali Sahabi, previously received the California Governor’s Environmental and Economic Leadership Award for taking a sustainable approach toward community development and environmental restoration in the 543-acre Dos Lagos mixed-use development in Corona, CA. A licensed General Engineering Contractor (GEC), Sahabi is an expert in building resilience and sustainability. He is Co-Founder and Chief Operating Officer of Optimum Seismic, Inc., which has completed more than 3,500 structural retrofit and adaptive reuse projects for multifamily residential, commercial, and industrial buildings throughout California. Contact Optimum Seismic at 323 978-7664 or visit optimumseismic.com to learn more about your adaptive reuse options for your building.