Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Tuesday, June 18, 2019

Here is the real cause of increase in homelessness in Los Angeles 2019 - by Mary Cummins

cause of homeless increase in los angeles california is the recovery from the real estate recession, mary cummins, real estate appraiser, appraisal, mayor eric garcetti,
There has been a significant increase in the number of homeless people in Los Angeles and the entire state of California. One of the biggest causes besides stagnant wages and 30 years of not building enough units is the recovery from the real estate recession that began in late 2007. If you look at the chart there is a direct correlation between the rising price of homes, 2-4 units and apartment buildings and homelessness.

I've been a real estate broker, appraiser in Los Angeles since 1983. My specialty is apartment buildings. I have gone through three boom and bust real estate cycles in Los Angeles as a broker, appraiser. While I've always been concerned about the homeless I've never lived in an area with homeless people previously. I'd only see them doing appraisals in South LA or downtown. I now live in an area with homeless people.

The great recession started in the fall of 2007. By 2009 some properties had dropped 35%. Some new DTLA lofts dropped by 50%. HOA were going bankrupt. Entire loft buildings were in foreclosure. During this time people who could afford to hold their property held and rented it out. By 2010 prices started to rise a little. By 2014, 2015 some values were almost close to what they were fall 2007. Some people started to sell in the bull market while prices continued to rise. Prices continued to rise until fall 2018. We are now in the beginning of a real estate recession though apartment buildings are still doing well because of lack of sufficient units.

By 2016, 2017, 2018 people started selling their properties. They sold homes and 2-4 units, apartment buildings. Most of the homeless came from 2-4 units and apartment buildings though some may have come from homes which were group rented. As these properties sold the tenants were evicted for many legal reasons. You can pass through major renovations to tenants. As most landlords were not properly maintaining their units during the recession these properties needed work. They were class C buildings. Class A buildings are luxury new. Class B buildings are renovated and rented for market. The tenants were not able to pay the increase in rents. They became homeless. They couldn't afford to move or store their possessions so they left most of them. Landlords, contractors dumped the items on the street or maybe dumped it a few blocks away. This is where a lot of the trash comes from. You can tell it's eviction trash when it includes mattress, clothing, household items... Construction trash and business trash looks very different.

The best way to make money as a real estate investor in Los Angeles is to buy run down units with below market rents. Get rid of the tenants, renovate the building and re-rent for market rent. This provides the best return on investment. It's just a business deal like buying a car for $5,000, fixing it up for $1,000 and selling it for $7,500. Investors aren't trying to make people homeless. Homelessness is just collateral damage.

I will now focus on an area of which I'm very familiar, the area around USC. Rents around colleges and universities are generally higher than the rest of the city. From 2015 to today I'd say at least four run down apartment buildings per block have been sold, renovated and re-rented for market rent. The rate of sale of these buildings increased drastically since 2013 and mainly 2015. Some of these properties were old large homes converted to units with and without permits back in the 1980's when the area was very run down.

The poor tenants and their poor friends who stayed with them were all evicted. With some of these properties people were living in garages, carports and patios. In some apartments every room was turned into a bedroom including the living room, dining room, pantry. Some rooms were divided with a hanging sheet into two bedrooms. The tenants appeared to be Latino, some black, a few white day laborers, maids, restaurant workers, construction workers... low wage people. They were not Section 8 tenants.

The rebound of the real estate market happened in Los Angeles alongside the revitalization cycle of real estate of some poorer parts of the city. Some call it gentrification. This causes an increase in renovation and new developments which bring money, tax income, jobs, businesses which help the community, city and state at the cost of an increase in number of homeless. Here is one property which I watched as poor tenants were evicted, their possessions were dumped on the street, property was renovated and they're now trying to rent it. I can give you many more addresses where the same exact thing happened. Most were just poor working people who were evicted.

The other causes of the rise in homeless is stagnant wages. Even if you made $15/hr, you still couldn't rent a one bedroom in Los Angeles with your take home pay. You need two people making $15/hr to rent a cheap one bedroom.

The most significant cause of homelessness and the housing crisis in LA is lack of development of housing units over the last 30 years. The cause is/was rise in cost of land, cost of construction, development red tape and NIMBYs. Here are a few ideas from others and some of my own about how to deal with the housing crisis.

FTR Mayor Eric Garcetti did not cause this problem. He inherited this problem. The rise in homelessness is caused by the rebound from the housing recession, developer red tape, stagnant wages, insufficient development of new units and NIMBYs. Garcetti is doing what he can to try to fix the problem. Instead of trying to house the homeless as a way out of this mess we need to look at the causes. In domestic animal rescue we state you can't adopt your way out of pet over population. You have to work on the causes of pet over population. The same applies here. LA can't afford to build housing for all the homeless. We need to keep people from becoming homeless in the first place. We need to get the homeless back into productive jobs so they can pay for housing on their own.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.

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1 comment:

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