Los Angeles rents are on the rise, hundreds of thousands of Los Angeles renters still await rent relief, and now, Southern California home prices have hit a new all time high. As we work to find creative solutions to the number of challenges Los Angeles residents are facing during this uncertain time, we must evaluate not only how we can increase the production of new affordable housing, but how we ensure that our existing housing stock is being managed in a way that makes homeownership obtainable and provides safe and affordable options for renters.
Home and rental prices in Los Angeles have been steadily increasing for the last decade; every year, housing costs get further out of reach of Angelenos, particularly vulnerable low- to middle-income residents and communities of color. In the LA region, Black and Latino renters are far more likely than white renters to be cost-burdened, making it that much harder for families of color to save for a down payment and become homeowners. Only about 34% of Black Angelenos and 39% of Latino Angelenos own homes, compared to 58% of white households.
There is an increasing prevalence of large, corporate landlords–private equity firms like Blackstone as opposed to smaller local landlords–and nearly 75% of rentals are now owned by large landlords and investment vehicles. Although many corporate landlords entered the market in a big way in 2008, buying up foreclosed homes, the COVID-19 pandemic has exacerbated their impact on our housing crisis. The sudden surge in potential homebuyers over the course of the last year, partnered with our ongoing home shortage, has made the housing market even more competitive. In this environment, corporations with billions of dollars at their disposal to gobble up single-family and “missing middle” homes like duplexes still thrive, far outbidding ordinary homebuyers–particularly first-time homebuyers and people of color. These investors then rent their investments, often at above-market rates, making rental costs higher and depriving ordinary individuals of the ability to build intergenerational wealth by purchasing a starter home or building savings.
Large corporate landlords also enjoy an anonymity that many smaller landlords do not. In Los Angeles and across much of California, LLCs and other legal entities, which many corporate landlords operate through, are not required to disclose their beneficial owners’ identities to state regulators. The result is that it’s harder for tenants in these rentals to advocate for themselves, and just as hard for city and local governments to advocate on their behalf. Tenants who have issues with negligent corporate landlords often don’t know how to elevate their issues. It’s impossible to hold absentee landlords accountable for code violations or unlivable conditions. Importantly, it also makes our jobs as policymakers harder when we do not have access to full information or transparency about our housing markets.
While large real estate firms have an important role to play in our housing market, as a city of renters it’s important that Los Angeles’ rental housing stock is managed and operated by responsible actors invested in providing safe, adequate, and secure housing. Our renters are not to be treated as pieces in a game of Monopoly.
Passing state legislation like AB 889, introduced by Assemblymember Mike Gipson, that will require corporate landlords to report their identities and make that information accessible to the public, will make it harder for bad actors to skirt responsibility for their profit-driven buying practices and rental conditions. And support for AB 1199, also from Assemblymember Gipson, will impose a tax on the largest corporate landlords and discourage the further consolidation of property ownership in the hands of a few while addressing the impacts of this consolidation by supporting relief for tenants and small mom and pop landlords, homebuyer education, affordable housing and homelessness, and job training. Disclosure of beneficial ownership of corporations purchasing residential real estate in Los Angeles and imposing a tax on the largest corporate landlords is necessary to further our understanding of the issue and to begin to bring accountability to our communities.
At this critical moment, we are calling on our state legislators to help local governments protect tenants and increase opportunities for Black and Latino homeownership by requiring greater transparency of corporate landlords. Together, we can protect tenants, increase transparency, improve homeownership opportunities, and work to resolve the housing crisis.
Councilmember Monica Rodriguez is a Los Angeles City Councilmember, representing the 7th District including the San Fernando Valley, Pacoima, Sundland-Tujuga, Sylmar.
Holly Mitchell currently serves as a member of the Los Angeles County Board of Supervisors. She served as a State Senator for California’s 30th Senate District from 2013-2020.