OpEd: The cost of housing

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Housing is the single biggest expense for most people. Whether one rents or owns, the cost to keep a property has many expenses outside of the principal mortgage payment.

The owner of a property, be it yourself or your landlord, must pay property taxes, interest on the loan, insurance, and maintenance in addition to the principal. Sort of like owning a car means you have to include the cost of registration, gas, insurance, maintenance, and even a ticket!

Housing is money. Property taxes are the number one source of bankable revenue in every city. Property taxes pay to keep the city government working.

Why so expensive? Let’s start with government-imposed property taxes that fund city coffers and spending programs. My 2-bedroom, 1900 square foot house carries a property tax bill of about $21,000 per year or $1,750 per month. And it doesn’t even come with a parking pass.  

Fees, as you see above… a) basic general levy tax 1% of the entire assessed value of the property. Voted indebtedness taxes, the metro water district tax, community college tax, unified school district tax, safe clean water tax, flood control tax, WeHo sewer tax, WeHo garbage and recycle tax, WeHo street maintenance tax, county library tax, Measure A tax, a wb mwd standby tax, LA County fire dept tax, trauma emergency services tax, LA west mosquito tax, and a county dist tax.

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In a small 4-unit building rented at 2500 per unit and with an assessed value of 2.2 million the property owner would be paying about $25,000 in property taxes.   One of the 4 units rented would be needed to serve just the property taxes.  There is very little flexibility to lower rents of other units.   And its more complicated with commercial leases.  Commercial tenants pay CAM, – common area maintenance which passes those costs directly to the tenant.         

Interest rates, and interest on the loan is another huge expense for most property owners. A condo selling for 800k with 20% down and financing 640k at 6.5% interest carries a $41,000 annual interest cost.   $3,466 per month for interest on the loan.   Between the taxes and the interest we are well over $4000 per month for this apartment without principal or homeowners dues or maintenance or cable!  

Insurance is mandated by the banks holding the notes. California has among the highest rates of insurance. Gas and Electric, (loaded with the add-on taxes too), and maintenance, upkeep, landscaping – whether you own or rent these are contributors to the cost of housing.

Let’s add on the highest minimum wage in the nation which also means the highest costs of labor for everything we do in our city. Those extra costs not only affect small businesses, they affect residents and landlords too.

For developers looking to build new residential units, there is a mandated set aside of 20% for ‘affordable housing’. Affordable housing refers to government-subsidized housing at lower than market rents. 1 out of 5 lucky persons get that affordable housing unit. 4 out of 5 people pay the difference. It is a fact that both West Hollywood and Santa Monica, with the strictest rent control ordinances, also have the highest rents in the region.

When we refer to those cherished 1 of 5 coveted affordable housing units there are more problems. Favors and fraud.  Have you ever heard of a single person petitioning the rent stabilization commission to remain in their units because they no longer qualify?  There are many insiders including 3 current and former commissioners who have secured affordable housing units without winning the lottery.

I know a movie producer who hit it big on his film while in an affordable unit and did a workaround to avoid having to move out of his below-market rental. There is a former rent stabilization commissioner who snatched an affordable housing unit at the prestigious Domain, all while serving on the commission and without disclosure. The reality is people fudge their income to get these units.

Rent Control sounds perfect but it’s not serving us well. Old buildings under rent control age with their tenants and all the new buildings are at market rate.  A friend in Palm Springs maintains his rent-controlled apartment in West Hollywood and rents it out. Everybody has their hand in the housing pot of gold.

It’s harder and harder to pencil out a residential development in West Hollywood with all the rules and conditions and costs. The only answer is high-priced luxury housing. That’s the result of the policies that have been implemented. Forty years ago West Hollywood did not have the highest cost to do business, or the highest cost of land and labor.

If you want to find out who is pitching the housing crisis just follow the money. Developers use the housing crisis’ to get around local zoning ordinances to build bigger, larger buildings “in the name of the community”. Our heroes the developers.   Is there a housing crisis? Or is the housing crisis a sales pitch used by developers and politicians? We are not going to be building housing that is affordable on the highest-priced land, with the highest cost of labor, and set asides for lower and middle-income units with restrictions on building heights and all under a fault line..

What about the 750,000 people who left the State of California over the past few years? Vacancy rates among rental housing increase to one of its highest rates in 2023 at just under 5% of all housing units..

There is a direct correlation between those who scream ‘housing crisis’ and those who seek to benefit from the crisis. But even a developer cannot save us from the high costs of construction, the high costs of property taxes, and the high costs to build.   Let’s be real, – in the past decade developers enjoyed an unprecedented era of low interest rates and opportunity to build.  Our problems today are the results after the boom. More unhoused, more vacancies, and many people priced out of the market.

In fact, West Hollywood has the highest singles tax on the West Coast. Yes, google it. The singles tax is the disparity between what it costs for a single person to live in a community versus a couple who split the expenses. Communities with high cost of housing out-price single people. Communities such as West Hollywood create an environment that only 2 income families or couples can afford the price of rent. This one factor has put West Hollywood on gentrification speed. Our politicians did not protect our ‘single’ lifestyle by approving the development of micro-units when it was needed. Perhaps that is the highest cost of all. We have lost our place as a beacon of hope where most single people can afford to live.

If you want to fix the housing crisis it begins with less taxation and less regulation.

 

 
 

 

 
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Jamie Francis
Jamie Francis
1 month ago

As a 13 year resident of Weho, initially moving to Westwood in 2004, I was priced out 20 years ago then in a Gentrified area! Santa Monica, Westwood and Weho created the housing crisis and was the epicenter two decades ago. I lived in an apartment complex unit built in 1957, for 7 years and currently as of 6 years is an affordable building only one of a dozen in Weho and the only one west of crescent heights. As for choice to a commenter, I should choose what neighborhood I want to live in West Hollywood, but stuck in… Read more »

Last edited 1 month ago by Jamie Francis
Happy renter
Happy renter
1 month ago

I never saw a property tax bill. I had no idea. Glad I’m a renter.

hifi5000
hifi5000
1 month ago

Wow, a 2 bedroom 1900 square foot house with a property tax bill of $21,000 a year??!! Sure,you can deduct that amount from your federal taxes,but still it is quite a chunk.

I have a 3 bedroom house that has a property tax bill of $1,800 a year.Of course,I am not in West Hollywood.To think I wanted to move there in the 1990s is unthinkable now.

Last edited 1 month ago by hifi5000
Kevin
Kevin
1 month ago
Reply to  hifi5000

The size of a property has no bearing on the tax assessment. It is a % of the appraisal or purchased value. It does highlight the real estate market in a highly desirable city like West Hollywood.

blue10speed
blue10speed
1 month ago
Reply to  hifi5000

You cannot deduct more than $10,000 on state and local taxes per year. That was changed during the Trump years. It’s a huge middle finger to blue states.

Steve Martin
Steve Martin
1 month ago

So what do you want to do? Disconnect your sewer? Cancel your garbage collection? If you were not paying these fees to West Hollywood, you would be paying them to the County. Plus you have the protection from Prop 13 that keeps your property taxes lower than more recent buyers. For all that, you get to deduct most of your mortgage interest and your property taxes from your Federal income taxes; renters don’t have that luxury. Plus our home values have always exceed the rate of inflation; the value of my former home on Huntley increased by a million dollars… Read more »

Steve Martin
Steve Martin
1 month ago
Reply to  Larry Block

I don’t see any solutions offered in this screed. It is a just a random collection of grievances from someone who has benefited from the system. You have made no secret that you dislike rent control but I don’t see you coming up with a better way to keep long term tenants in place. Insurance is mandated by the mortgage companies; they need to protect their security. Do you propose eliminating WeHo’s set aside for affordable housing in new developments? That what it sounds like. If you want taxes collected thru property taxes to be more equitable, then advocate for… Read more »

Cy Husain
1 month ago
Reply to  Larry Block

Just to be clear Mr. Block, you pay over $21,000 a year in property taxes without using any tax shelters, credits or deductions ❓ There is the California Homeowners’ Exemption, the claim for Homeowners’ Property Tax Exemption, available from the county assessor. There are CPAs (Certified Public Accountants) some are also Attorneys, they enable Trump to pay less in taxes than a West Hollywood minimum wage worker. Need me to refer one to you

Cy Husain
1 month ago
Reply to  Larry Block

NOT at all implying you are anything like tRUMP, I’ve purchased items at Block Party like the trump toilet paper making fun of him. We are all affected by the actions of powerful under regulated private equity real estate moguls to the point that even being a successful low level millionaire is NOT enough to secure a middle class life style. A failure of capitalism Marx warned us about ❗

Former planning commissioner
Former planning commissioner
1 month ago
Reply to  Steve Martin

It’s no wonder we are in this mess with your perspective. The taxes are too high and costs of ownership and housing is too high. It appears that went over your head.

Dan
Dan
1 month ago

Steve only sees what’s on the surface and is not a critical thinker. His track record is on the wrong side of most issues.

WehoQueen
WehoQueen
1 month ago
Reply to  Larry Block

Actually, I appear to be the only one who has ever actually proposed a solution to housing in weho, which is make it based on ability to pay. No free ride for anyone. Let’s get rid of the freeloaders, and let them live where they can afford, hopefully somewhere like Barstow, Baker or Blythe. There is no god-given right to live wherever anyone wants. I would love to live in Monaco, but no one has volunteered to subsidize me, so I live in Weho instead. Where I can afford to live without having my hand out for someone else to… Read more »

greeneyedguy
greeneyedguy
1 month ago
Reply to  Larry Block

Steve was spot on in his response. A great rebuttal to whatever this op-ed piece was supposed to do.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Larry Block

Sorry, but you haven’t convinced me of anything.

And this is just anecdotal evidence- but my landlord is currently breaking several laws/regulations the city has put forward. The fines are a drop in the bucket.

I’m still paying my MARKET RATE rent every month though!

Steve Martin
Steve Martin
1 month ago
Reply to  greeneyedguy

Larry, you need to quit posting while you are ahead. When I bought my first home, my mortgage and taxes were probably $500 a month more than a two bedroom, one bath unit. But I got a mortgage interest deduction that saved me some of that money and equity in the house rose every year. Despite all of the “challenges” of home ownership, when I sold my home, I had a million plus return over my original investment. Renters don’t reap any equity. So how can you say that the grass isn’t greener on the home ownership side? So who… Read more »

Too much tax too little to show for it
Too much tax too little to show for it
1 month ago

They are taxing us out of our homes and wasting all the money not solving problems. They actually pocket the money by increaeing their salaries and benefit. It’s government sponsored crime.

Alan Strasburg
Alan Strasburg
1 month ago

Once again Larry Block thinks big and beyond the spin of soundbites that often attend public discourse. Reality is more complicated than can be accommodated on social media and its unique form of spirited debate.

WehoQueen
WehoQueen
1 month ago

Regulation for zoning makes sense, so we don’t have an auto repair shop inside a residential neighborhood, but telling a property owner they have to accept less rent than the fair market allows, is nothing short of fascism/communism. It is ruining every city in the world that goes along with this nonsense. I trust we all know someone abusing the Weho rent control laws, as your “friend” does renting out his supposedly rent controlled unit, intended to benefit some poor unfortunate soul who can’t afford weho prices, but who gets to live here subsidized by the landlord. The landlord gets… Read more »

Really...
Really...
1 month ago
Reply to  WehoQueen

Since you hate WeHo so very much, have you thought of moving to Barstow?

WehoQueen
WehoQueen
1 month ago
Reply to  Really...

Why should I move to Barstow. I want to be around sophisticated people like you who support freeloading in weho. I note you were radio silent on people who abuse rent control and illegally sublet.

greeneyedguy
greeneyedguy
1 month ago
Reply to  WehoQueen

And yet you keep doing business here when you could easily sell your building you supposedly inherited or purchased decades ago. Why do you continue to stay here?

WehoQueen
WehoQueen
1 month ago
Reply to  greeneyedguy

I stay here cause there are still enough morons around, who want to rent, and make me rich. Even with rent control, I do well, but the point is I could and should be doing a lot better.

greeneyedguy
greeneyedguy
1 month ago
Reply to  WehoQueen

This comment right here is the antithesis for Larry Block’s entire argument.

Landlords view renters as “morons” and less than.

Your point of view is to take advantage of as many people as you can. I have no doubt your tenants hate your guts.

WehoQueen
WehoQueen
1 month ago
Reply to  greeneyedguy

I suspect they are more jealous of me rather than hateful of me. I love my tenants who pay the agreed rent on time. I don’t fault anyone for legally taking advantage of rent control laws, despite my belief they are bad laws. I still follow the law. I’m sure you wish and think I don’t follow the rent laws.

greeneyedguy
greeneyedguy
1 month ago
Reply to  WehoQueen

You just called every single person that rents for you a moron. And then you proceed to say you “love” them.

If I had to guess, I’d say you don’t even own any buildings- your rich family does.

Alan Strasburg
Alan Strasburg
1 month ago
Reply to  greeneyedguy

He did not, in fact, refer to every single person that rents from him as a moron. He merely said that there remain enough morons who want to rent from him. Words matter, and how sentences are constructed matters. Honesty in debate really matters. Be honest in your debate style.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Alan Strasburg

You’re arguing semantics, Alan. This is even low for you. I’d like you to answer my question: do you live in a rent controlled apartment? Yes or no?

Andrew Solomon
Andrew Solomon
1 month ago

Totally agree with less regulation; there’s nothing more regulated than land use. We have city hall telling us how tall and how dense every street should be.

It’s time to take a look at abolishing zoning. Let the market decide what should be built where, not some city hall planner. It works in Houston.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Andrew Solomon

I’ve never seen someone bring up Houston as an example of great urban planning/zoning but here you are! Wow, just WOW

Peter Buckley
Peter Buckley
1 month ago
Reply to  greeneyedguy

He’s from Texas and he wants WeHo to be like where he comes from. Extraordinary. Reminds me of Soon-Shiong and her dreams for change.

Andrew Solomon
Andrew Solomon
1 month ago
Reply to  Peter Buckley

Hi Peter, yes I’m from Texas. And given today’s climate, I totally get why you’d hold that against me! But I moved to West Hollywood in 2014. Hopefully 10 years has bought me enough credibility to post in the comments sections. I very much wish my dad was rich enough to buy a major newspaper. Sadly he is a retired high school football coach (yes all Texas stereotypes are true). BTW, I’d be happy to meet sometime in person if you ever want. I’m friendly I promise! We’ve gone back and forth on a couple posts here and it’s silly… Read more »

Andrew Solomon
Andrew Solomon
1 month ago
Reply to  greeneyedguy

Yes, it’s surprisingly talked about quite a bit amongst the urban planning & Yimby twitter crowd. The Houston mayor’s office has even presented twice to LACAHSA (LA County Affordable Housing Solutions Agency) in the past 12 months.

Houston has done a very noteworthy job addressing their homelessness problem in the city, despite getting very little state or local funding/grants (because Texas). And their success is mostly because they have a very favorable non-regulatory environment.

There’s a good book about it called Arbitrary Lines by Nolan Gray if you’re interested in learning more about it.

Jim Nasium
Jim Nasium
1 month ago
Reply to  Andrew Solomon

People are moving to Austin where there is zoning and more orderly development…….Houston, not so much.

Jim Nasium
Jim Nasium
1 month ago
Reply to  Andrew Solomon

Houston has very strict vagrancy and encampment laws that are enforced.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Andrew Solomon

I’m sorry, but Houston has to be one of the worst cities i’ve ever visited on this planet. NOTHING should be modeled after that place.

Alan Strasburg
Alan Strasburg
1 month ago
Reply to  greeneyedguy

I think it’s tied with Phoenix as the land of a dearth of zoning laws resulting in really awful city planning and development.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Alan Strasburg

I’d consider them both the chernobyls of US urban planning

Bastian
Bastian
1 month ago
Reply to  Andrew Solomon

So if the market decides to replace Gelson’s with a 50 foot story tower, 500 units, that will take 5 years of construction to build, adds to traffic congestion, on street parking woes, casts a shadow on nearby parks and prevents neighbors from adding solar, you’re good with that?

Jim Nasium
Jim Nasium
1 month ago
Reply to  Andrew Solomon

Yeah Houston

Screen-Shot-2024-02-26-at-12.26.02-PM
Andrew Solomon
Andrew Solomon
1 month ago
Reply to  Jim Nasium

Good example, I looked this up. That’s the Southmore, a new luxury apartment building with insane amenities like a screening room, private wine tasting room, etc. Rent for a 1 bedroom 900 sq apartment is $2200/mo. How far would $2200/mo get you in Weho on a new lease?

BTW I think most of those amenities are silly and not something I would want. But when you build more units, prices go down. It’s just basic supply and demand. We arbitrarily limit the number of housing units in Weho because of the regulatory framework here. They don’t in Houston.

Jim Nasium
Jim Nasium
1 month ago
Reply to  Andrew Solomon

Medium household income in Houston $60,000. West Hollywood $80,000……Keep going.

Alan Strasburg
Alan Strasburg
1 month ago
Reply to  Andrew Solomon

Look at 960 North Alfred where a one bedroom is listed at $2,198. There’s a fine line between responsible growth and development and reckless giveaways of public policy to greedy development. Beware, my fellow residents, we are seeing the unmasking of the developers’ new best friend. of the coming debate that one side will use to refer to pro-affordable housing, pro-responsible development, and pro-neighborhood preservation as NIMBYs, MAGAs, right-wingers and perhaps worse. Beware of money flowing in from Unite Here and the developers’ lobby aimed at telling lies in support of a radical narrative. Just beware.

Andrew Solomon
Andrew Solomon
1 month ago
Reply to  Alan Strasburg

So this listing vs this? I think you’re kind of making my point for me.

Also, where does one go about applying for this influx of money from developers? I feel kinda dumb making these arguments for free.

Build more houses. It’s basic supply and demand. If we want to lower costs, we need more units.

Steve Martin
Steve Martin
1 month ago
Reply to  Andrew Solomon

Abolish zoning in West Hollywood? Have you thought this one out? So developers could buy and demolish rent controlled buildings and then construct high-rise hotels? Purchase a single family residence next to West Hollywood Elementary School and open up a marijuana dispensary?
I seeing a lot of people looking for simple solutions to complicated issues.
Wish life was that easy.

Andrew Solomon
Andrew Solomon
1 month ago
Reply to  Steve Martin

Thought about it plenty. There’s a big difference between use and density (ie your marijuana store strawman). You can regulate noxious uses without regulating density.

Jim Nasium
Jim Nasium
1 month ago
Reply to  Larry Block

Ok, how about a lumber yard? Maybe that’s a better example of the no zoning model.

Andrew Solomon
Andrew Solomon
1 month ago
Reply to  Larry Block

lol I know better than to wade into a Steve v Larry comment squabble. Well at least I do now. But 35+ comments shows this op/ed clearly struck a chord.

I agree with much of what you said, disagree with some. But the basic tenet is true. Housing has become unaffordable in this city, especially for singles. We’ve made this place unobtainable for the people who need it most.

Steve Martin
Steve Martin
1 month ago
Reply to  Andrew Solomon

Exactly, you put something up for conversation and even if folks don’t agree, at least you got people thinking about the possibilities.

Steve Martin
Steve Martin
1 month ago
Reply to  Larry Block

You can if you abolish zoning.

Left Field
Left Field
1 month ago
Reply to  Andrew Solomon

The land under West Hollywood is a toxic soup of chromium from metal plating plant that discharge water into the street for years. Nitrates from old movie film stock, .chemicals used in dry cleaning and diesel fuel from leaking storage tanks . .South of Weho, the La Brea Tar Pits have had issues with petroleum leaking into parking garages for years.
I think the EPA should decide where to build in West Hollywood, not planners.

greeneyedguy
greeneyedguy
1 month ago

“Rent Control sounds perfect but it’s not serving us well. Old buildings under rent control age with their tenants and all the new buildings are at market rate” I need to point this out: when someone signs the lease on a rent controlled apartment now, the price tag is market rate. Millennials like myself who were not in West Hollywood 20, 30, 40 years ago have all had to rent these older units at market rate. I signed the lease on my current apartment within the last 5 years (market rate) and have gotten several rent increases since then. Do… Read more »

Steve Martin
Steve Martin
1 month ago
Reply to  greeneyedguy

Long term residents, whether they be owners or tenants make for stronger communities and creates an electorate that is more likely to keep government accountable.

Alan Strasburg
Alan Strasburg
1 month ago
Reply to  Steve Martin

Along with long-term residents in offices of public trust, both elected and appointed.

WehoQueen
WehoQueen
1 month ago
Reply to  Steve Martin

I think you mean long term freeloaders. “Residents” are really people who financially contribute are truly care about their community. The long term freeloaders you are referring to, add nothing to the city, but more handouts from those who do contribute.

WehoQueen
WehoQueen
1 month ago
Reply to  WehoQueen

Excuse me for replying to myself, but I wanted to add: If the freeloaders were getting more handouts in any other city, they would quickly move over there. They have no loyalty to the city of weho, they have no investment in the city. Only their hands out, ready to take what they can get. Don’t fall for the “oh, I’m a weho renter, and I just love weho”. They love the handouts, nothing else.

greeneyedguy
greeneyedguy
1 month ago
Reply to  WehoQueen

They way you talk about people is actually sociopathic. You don’t view them as people but just as parasites. That is sociopathy. You have zero empathy. How can you say just because someone has rent control, they “add nothing to the city”? That has to be the most moronic thing i’ve heard someone say on this website. What’s worse is that you wrote some pathetic embarrassing eulogy for Esther Baum on this website when she CLEARLY contributed so much to this city during her 97 years on earth. She was in a rent controlled apartment for over 30 years! Shame… Read more »

Last edited 1 month ago by greeneyedguy
Gimmeabreak
Gimmeabreak
1 month ago
Reply to  greeneyedguy

Have those several rent increases you have paid been anything more than whatever the rate of inflation was for the previous year?

greeneyedguy
greeneyedguy
1 month ago
Reply to  Gimmeabreak

They have both been beyond inflation. My unit is above market rate currently.

Pay up or Learn who is
Pay up or Learn who is
1 month ago

Thank you for explaining this to our County Supervisor, Mayor and Vice Mayor who pay no property taxes for schools or green energy or homeless services but put the blame these problems on those of us who are paying the bills while they get a free ride.

greeneyedguy
greeneyedguy
1 month ago

Paying rent on an apartment lets the owner pay property taxes. They don’t get a “free ride”

Steve Martin
Steve Martin
1 month ago
Reply to  greeneyedguy

Yes, and historically, the majority of the City’s tax revenue comes from folks who do not live in West Hollywood. While higher property taxes are starting to change that picture, the majority of residents benefit from the City’s revenue stream based upon hotel tax, development fees and parking tickets.

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