COUNTERPOINT: Supply and demand, not policy, drive development

Los Angeles is a city of excess — too much traffic, too much smog and too much self-awareness. Although its constant state of demand keeps it hungry and extremely ambitious, L.A. is plagued by a basic crisis of economics: Too many people want too many things. Nowhere is this steep demand more exemplified than by the city’s high median rent, which ranks the ninth-highest in the nation for one-bedroom apartments. Seeking to rectify L.A.’s extremely exorbitant rent, which increased by 11.6 percent in 2015, the Coalition to Preserve L.A. and the Build Better L.A. Initiative are introducing well-intentioned but fundamentally misguided measures to the 2016 ballot.

An evaluation of the measures requires an understanding of L.A.’s unique real estate landscape. In 2015, rent increased almost everywhere, except for some of the wealthiest parts of L.A., such as Bel Air, the Palisades and Hollywood Hills West. By contrast, less wealthy areas of L.A., such as our own South Central, had almost no vacancies, signifying a desperate need of housing development in those regions. In fact, the 90007 zip code was one of just four total in the county with median apartment rent surpassing $3,000 per month. All this signifies that, save for the wealthiest areas of Los Angeles, the city needs more housing immediately.

The Coalition to Preserve L.A. measure, known as the Neighborhood Integrity Initiative, would “impose a moratorium on construction that increases development density for up to two years” and remove the city’s right to make exceptions for community plans and zoning codes. This initiative has the unique distinction of being misguided both in its target and its methodology. First and most importantly, L.A.’s several-hundred-page, decades-old zoning code is infamously outdated and counterintuitive, actually encouraging economic stratification in its housing developments. Second, making it harder to develop new housing projects makes housing even more unaffordable.

The Build Better L.A. measure requires developers to offer a certain percentage of “affordable” units of housing in projects with 10 or more residential units and hire a specific number of local workers. This measure ignores the fact that having “affordable” housing in areas five miles removed from the Metro, such as the Hills or the Palisades, is entirely impractical for the low-income worker, who will in many cases require public transit and in most cases, will be working in less wealthy areas.

Mayor Eric Garcetti has already publicly lambasted the Neighborhood Integrity Initiative for its stagnating development, asserting the very pressing truth that “we still need to build things in Los Angeles.” These measures, both alone and in tandem, will create a catastrophic housing shortage, especially in low-income regions with vacancy rates of two percent and under. Those actually advocating for L.A.’s citizens would be better off restructuring the zoning code and incentivizing housing development because, as any introduction to economics course will tell you, increasing supply will drive down prices.

Los Angeles will always want more of everything. Instead of running against the growing waves of consumer demand, voters must encourage measures which create a housing market that can rise to the challenge of demand, instead of operating in a delusion that ignores basic laws of supply and demand.

Tiana Lowe is a sophomore majoring in math and economics. “Point/Counterpoint” runs  Tuesdays.