Will a booming housing market keep low-income families from the home of their dreams? Jeffrey Kaye reports.
JEFFREY KAYE: The U.S. housing market is thriving. Building permits and home sales exceed last year's numbers.
SPOKESMAN: The current owner who lives here has done a lot of things to the house-
JEFFREY KAYE: In the Los Angeles area prospective home buyers and tenants have been locked in bidding wars over home sales and rents. In some neighborhoods prices have gone up more than 30 percent in the last year.
SPOKESPERSON: This is a really desirable unit.
JEFFREY KAYE: The competition can be ferocious in particularly desirable communities, such as Santa Monica, which is on the coast. At the Santa Monica office of the Fred Sands Real Estate Company manager Donna Beebe says the market is red hot.
DONNA BEEBE, Real Estate Agent: We're experiencing about, oh, 50 percent of our offers are multiple offers, which is to say that more than one buyer has written an offer on the property, and usually a manager sits in at that time, and it's almost an auction-where in order to be the winner, you're coming in with the highest bid.
JEFFREY KAYE: But while business is booming for real estate agents, it's another story for renters. Los Angeles County has the worst shortage of affordable housing in the U.S., according to a recent national study. Here the average rent for a two-bedroom apartment is $850 a month. That's beyond the reach of many families who resort to doubling up or crowding into converted garages or substandard buildings. LA City's slum housing task force keeps busy. Headed by prosecutor Richard Barb, the task force investigates violations of health, fire, and building codes. Barb says at any given time his staff is working on a hundred different buildings where tenants filed complaints.
RICHARD BOBB, LA City Prosecutor: And these people have no place else to go, and so some of these buildings have what they call a warm bed-apartments-somebody sleeps in them during the day-and then goes to work at night-somebody sleeps at night and goes to work during the day and there are two or three families living in the same apartment unit.
JEFFREY KAYE: How serious is the problem in Los Angeles?
RICHARD BOBB: It's so serious that nobody knows because nobody's done a survey.
JEFFREY KAYE: I mean, I've read that there are 156,000 or more apartment units that are substandard.
RICHARD BOBB: Those statistics were done by the Census Bureau, but they're based on estimates. Nobody knows for sure.
JEFFREY KAYE: Nationwide, housing for one in seven American renters is unaffordable. That figure comes from the U.S. Department of Housing & Urban Development, which found in a recent study that 5.3 million American households spend more than half their income on rent or live in severely substandard housing. Peter Dreier is a former Boston city housing director, now a public policy professor at Occidental College in Los Angeles. Dreier says the widening gap between incomes and housing prices is at the heart of the problem.
PETER DREIER, Occidental College: So you have an economic boom in a city or in a region, and, as we said earlier, rents go up, and so the process is often called gentrification, where instead of trickling down the housing market trickles up. So you have two things going on. You have fewer federal subsidies to make housing affordable, and then you have the market operating exactly in the opposite direction, which is more and more people who used to live in private housing with decent rents, those rents are now through the roof.
JEFFREY KAYE: All of which puts pressure on government to maintain the existing stock of affordable housing. LA City is beefing up its apartment inspection program to examine buildings before there are complaints, but prosecutor Bobb says these holding actions.
RICHARD BOBB: I feel like we're treading water.
JEFFREY KAYE: What do you mean?
RICHARD BOBB: Well, I mean every other task force brings up to code about 1500 units, which is far more than are being built in the city right now. But then what have you got? You've got a low income apartment building that is marginal, that at least is safe, and habitable. But we need to build some new housing.
JEFFREY KAYE: In fact, the nation's stock of affordable housing is shrinking. Besides cutbacks in public housing and rental subsidies, private sector production has slowed, according to Peter Drier.
PETER DREIER: They can't make the numbers work. In a city like Los Angeles to build a unit of housing costs about $100,000 or $120,000. And in order to make that unit profitable a landlord needs a rent of about $1,000, and there aren't enough people who can afford to pay $1,000 a month, and so they're not being built.
JEFFREY KAYE: That's one reason the Martin family, parents and three young children, live crammed together in a one-room apartment in Hollywood and four-year-old Gabriella sleeps with her parents in the same bed. The family pays $400 a month rent but hopes to soon move into something more spacious. Across the street newly refurbished apartments are becoming available.
SPOKESMAN: It's for persons with low income.
JEFFREY KAYE: Until recently this building was abandoned, a haven for gangs and drug addicts. That was before the non-profit Hollywood Community Housing Corporation acquired it two years ago.
SPOKESPERSON: And here's another one of the bedrooms.
JEFFREY KAYE: Christina Duncan is executive director of one of a growing number of non-profit agencies that finance affordable housing-credits and government grants. The non-profits create housing for families who are at or just above the poverty level. But Duncan says the agencies are unable to keep up with the growing demand.
CHRISTINA DUNCAN, Hollywood Housing Corporation: We got 500 applications for this particular building. And there are only 22 units available.
JEFFREY KAYE: Their low income qualifies the Martins as possible tenants. Martin Martin earns a modest income as a motel clerk. His wife, Sylvia, doesn't work outside the home. Qualified tenants will be selected by lottery. If chosen, the Martins could move from their one room to a three-bedroom apartment for the same monthly rent. While some families are trying to move to affordable housing, others, such as Gina Urie, a single mother of five, fear losing what they've got.
She recently learned that her landlord would no longer accept her Section 8 housing certificate. That's a form of rental assistance like food stamps funded by the federal government. Landlords who accept the subsidies agree to rent set by the government. Urie is living on welfare in Santa Monica. She's going to school and hopes eventually to get a job. To stay put she'd have to come up with an extra $700 a month, the difference between the subsidy and the rent. So she says she has to move.
GINA URIE: This is our home. This is our community. And I don't want to have to leave this. I know all my neighbors. I'm very comfortable. I'm very safe and secure, and my children feel safe and secure. It's their home, and I'm not going to be able to find a place in Santa Monica, I'm sure, because the majority of owners are all opting out of their Section 8 leases.
JEFFREY KAYE: Many landlords who welcomed the rent subsidies during California's recession have stopped taking them. Today they anticipate getting higher rents than Section 8 will pay, particularly since California rent control laws are being weakened, allowing landlords to ask market rates. Landlord Herbert Balter was one of the first to opt out of the subsidy program. He's president of the Action Apartment Association of Santa Monica.
HERBERT BALTER, Landlords' Association: I don't see where it's written that I am to subsidize my tenants. It is a capitalist society out there, and I have a right to make a profit on my investment. So if you feel that Section 8 is giving you less than the market rent, I see nothing wrong with any landlord opting out.
JEFFREY KAYE: The effects of government and private enterprise on the supply of affordable housing are subjects of continuing debate and negotiation.
RICHARD RIORDAN, Mayor, Los Angeles: Our economy is up. Quality jobs are up. But now we have to get to a point where people can live in standard, excellent housing, not the kind of substandard housing we have all over our city.
JEFFREY KAYE: Recently, Los Angeles Mayor Richard Riordan joined with city and banking officials to announce a loan program to landlords to finance repairs of substandard buildings. In Santa Monica activists and the city council are also taking measures to try to resolve the plight of renters such as Gina Urie. In early June Urie and other recipients of federal housing assistance came to a city council meeting. At issue was a proposal for the city to subsidize rents should landlords opt out of the federal program.
SPOKESMAN: Let's step in. Let's help tenants pay their more rent in cases where their owner has opted out.
JEFFREY KAYE: Council members called on Washington to provide more financial assistance.
SPOKESMAN: I certainly hope we can resolve this issue in Washington and with HUD ASAP, as soon as possible, because there are not many cities in the country that can afford subsidized rent.
JEFFREY KAYE: There was no dissent.
SPOKESPERSON: Council member Greenberg.
COUNCIL MEMBER GREENBERG: Yes.
SPOKESPERSON: Council member-
COUNCIL MEMBER: Yes.
JEFFREY KAYE: And the council voted unanimously to provide city rent subsidies for the threatened tenants.
GINA URIE: I'll be able to stay where I'm at. My children will be able to stay there.
JEFFREY KAYE: You made it.
GINA URIE: Yes. I'm very happy.
DENISE ROBINSON: I was just happy because I didn't know if I was going to end up being homeless or not. And now so-it's kind of hard to speak.
JEFFREY KAYE: These renters will get temporary relief. But there is little dispute that the underlying problem will worsen unless more affordable housing is created.
JIM LEHRER: A further update. Last week the Martin family's application for that three-bedroom apartment across the street was approved.