Most Emergency Housing Vouchers Go Unused in Los Angeles
Only 5.8% of emergency housing vouchers distributed by the city of Los Angeles since last year were used, according to an L.A. Times report. The city had distributed all of the 3,365 emergency housing vouchers allotted to L.A. through the American Rescue Plan in 2021, but long delays in getting the time-limited vouchers out as well as a limited housing supply mean few of them are being used. The Times spoke to people experiencing homelessness who were given the runaround or received no response from the Housing Authority of the City of Los Angeles (HACLA), the agency that distributes the vouchers. HACLA denied some of the claims made by unhoused people and said the agency is understaffed. Other agencies are performing better: The county of L.A. had a higher rate of placements with the vouchers, at 32.6%, and Santa Barbara used all of its rental vouchers to place people into housing.
The Times report specifically looked at vouchers distributed as part of the American Rescue Plan, over 70,000 of which were distributed by the federal government last summer, with a national 38% success rate in getting people into permanent housing.
But the city has other types of vouchers. Housing Choice Vouchers, also called Section 8 vouchers, are allotted by the federal government and distributed by local public housing authorities, including HACLA and the Los Angeles County Development Authority (LACDA). Housing Choice Voucher holders typically spend no more than 30% of their income on rent, with the remainder subsidized by HUD. Many of these vouchers were prioritized by LA’s housing authorities for people experiencing homelessness or on the verge of homelessness. A new report published by the research institute Abt Associates looked at data from 2016-2020 and found that 65% of the housing vouchers distributed to unhoused residents by public housing authorities in Los Angeles County resulted in permanent housing placements. The report’s authors attribute this to caseworkers as well as an incentive provided to landlords who rent to people experiencing homelessness.
The discrepancy between the LA Times story and the Abt Associates report may have to do with the timeframe analyzed. The latter report examined a period prior to 2021, by which time LA’s vacancy rate sharply decreased. Vacancies were down 10% in the final quarter of 2021 compared with the year prior, as people who fled the city in the early months of the pandemic returned, according to The Real Deal. The discrepancy may also have to do with the long lag-time in finding housing: On average, it took 122 days for people experiencing homelessness to find housing with the Housing Choice Vouchers, according to Abt Associates.
The Fed May Be Exacerbating The Housing Crisis
Multiple interest rate increases at the Federal Reserve have taken their toll on the housing market. As of last week, 30-year mortgages were at around 5.5%, according to data from Freddie Mac. This means fewer people can afford to buy homes, pushing them to remain in the rental market instead. In theory, the Federal Reserve believes this will lead to an overall decrease in home prices within the next few years as demand decreases, with some analysts telling Insider home prices will decrease around 8% by the end of this year and one economist predicting a 25% decline by next year.
On the other hand, while home-building increased during the period of low interest rates that began in 2020, there is still an overall lack of homes compared to people who want to buy them: An estimated 7 million homes are needed to meet demand. And higher interests make it more expensive to build homes. This has led analysts at Morgan Stanley to predict housing prices will keep rising.
Another important factor: High interest rates are excluding individuals from the market, but corporations are more easily able to purchase homes by using their outsized assets or leveraging debt. Private equity has been buying up a larger share of single-family homes across the country and converting them into rental housing. A period of higher interest rates and cooling prices would likely be ripe for mass purchases by private equity giants and all but the most affluent Americans.
Higher mortgage rates will likely also push people into rental markets, driving up rents. At a Senate hearing on July 21, Lawrence Yun, an economist with the National Association of Realtors, testified that the higher interest rates were likely to benefit corporate investors and are unlikely to lower housing costs.
In San Francisco, Dueling Affordable Housing Measures On The Ballot
Two competing ballot measures in San Francisco will pit housing ideologies in the city, the San Francisco Chronicle reports. Both ballot measures are charter revisions intended to speed up the permitting process for affordable housing and teacher housing, but differ in affordability and supervisors’ ability to block spending.
The measure introduced by Supervisor Connie Chan would require 29.5% of units in mixed-income buildings to be affordable. Another ballot measure, called “Affordable Homes Now” and backed by Mayor London Breed, would require 21.5% of units in mixed-income buildings to be affordable. Buildings with 100% “affordable housing” would need to average out at 120% of the average median income, with individual units allowed to be priced at 140% so long as they don’t throw off the average. Breed’s measure would also remove supervisors’ ability to block spending when the city borrows money for affordable projects, whereas Chan’s measure would leave that ability with supervisors.
In the Bay Area and much of California, YIMBY or supply-oriented housing advocates often conflict with grassroots, tenant-oriented advocates who are highly skeptical of private industry and believe most new housing should be affordable. While supply-side advocates believe high affordable housing mandates restrict new construction, more left-leaning organizations and supervisors point out that the city has already met its state mandate for high-end affordable units. The state must build 33,000 new affordable units for low-income and very low-income renters by the end of this decade to meet its state requirement. By contrast, it built 150% more market rate units than the state required.
Both measures will be on the ballot on Nov. 8.
This article is part of Backyard, a newsletter exploring scalable solutions to make housing fairer, more affordable and more environmentally sustainable. Subscribe to our weekly Backyard newsletter.
Roshan Abraham is Next City's housing correspondent and a former Equitable Cities fellow. He is based in Queens. Follow him on Twitter at @roshantone.