There is a homelessness crisis in Los Angeles County. The homeless population has surged by 75% in the last six years all the while home prices are back to peak levels. Yet the home ownership rate still hovers near generational lows. California has seen massive growth in rental household formation. Surveys continue to find that Millennials prefer different living styles than their baby boomer parents. Forget about surveys, just look at the actual market. Record low inventory is being driven by baby boomers staying put and the lack of home building thanks to hardcore NIMBYism. So it is no surprise that we now have a homeless crisis in L.A. County. Recently, in Orange County a large group of homeless encamped in various areas where set to be moved into affluent areas of the county and people went ballistic. So where do we go from here?

The rise of homelessness

This is a big problem and is happening to a group with really no voice:

“(L.A. Times) The number of those living in the streets and shelters of the city of L.A. and most of the county surged 75% — to roughly 55,000 from about 32,000 — in the last six years. (Including Glendale, Pasadena and Long Beach, which conduct their own homeless counts, the total is nearly 58,000.)”

Keep in mind this has occurred during a booming stock market and a time when real estate values are soaring. The unemployment rate is low but you have a bimodal market – a smaller group of affluent buyers and investors and a larger working class that is simply unable to buy. You have this Puritanical notion from housing cheerleaders that somehow, younger people are buying too much Starbucks hence their inability to save for a down payment for the million-dollar crap shack. And yes, crap shack is an appropriate term:

“People in Koreatown step outside their fancy condos to find tents, rotting food and human feces at their doorsteps. Buses and trains have become de facto shelters, and thousands of people sleep in fear and degradation.”

Yet it is clear that some are living inside a housing bubble living a Wall-E type lifestyle – getting fat and lazy with myopic vision. They advocate a free market but only when it is convenient –more like social welfare for the real estate industry. You need only drive 5 miles in any way in L.A. County and you will find cracks in the system:

“We are moving more homeless families and adults into housing,” said Phil Ansell, director of the Los Angeles County Homeless Initiative. “What we have less control over is the inflow: people who simply are unable to pay the rent.”

Yet you have people paying the rent but in many markets you have people living like sardines and streets are filled with tons of cars because households need multiple paychecks to pay the rent. Of course many see no issue in this and pretend it is some sort of free market capitalism. No, this is cronyism and NIMBYism at its best. There is plenty of room to build more housing. Developers would knock down single family blocks and build New York style skyscrapers given current rents. But no, people want to keep their crap shacks and will fight tooth and nail since they got theirs. Not a free market at all.

The fact that homelessness went up by 75% in six years should be telling. You even see these issues in San Francisco where the typical home goes for $1.5 million. L.A. is becoming more like Gotham as the years go by.

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