L.A. Tops U.S. in Housing Imbalance

Los Angeles County leads the nation in housing demand, with six new jobs created for each new home that is planned, a new study released on Wednesday found.

Orange County and the three other major Southland markets also finished high in the quarterly report compiled by the Meyers Group, an Irvine-based housing research firm.

The study portends higher home prices and a widening gap between homeowners and those who rent.

“We’ve got high demand for housing, and we’re not providing it,” said John Burns, a Meyers Group senior managing director who conducted the study.

The report compared 110 metropolitan areas nationwide by job growth and the number of housing permits issued over a 12-month period that ended in March.

Los Angeles County finished first, with demand more than three times higher than the rest of the nation. Once Los Angeles regains all of the jobs lost during the early 1990s--projected to occur next year--the county’s home prices will escalate by 10% or more on an annual basis, Burns said.

Demand for housing in Orange County--which ranked fifth--was more than twice the national average, as more than four new jobs were created for every one permit issued. Ventura County was ranked 17th; San Diego, 24th; and Riverside-San Bernardino, 32nd.

The study found that home builders nationwide have fallen behind the nation’s ability to create jobs during the longest peacetime expansion in history. Housing demand overall is outpacing supply by 40%.

“It’s a sad story for the consumer,” said Ken Agid, marketing director for the Playa Vista master-planned community in Marina del Rey. He estimated that prices would escalate 1% a month during the next 18 to 24 months.

The inability to meet housing demand also will drive up apartment rents, which already are at record levels, make it more difficult for employers to attract and retain workers, and force more employees to make longer commutes.

There’s very little that can be done to improve the housing supply in Los Angeles County because there’s very little vacant land except in outlying areas such as the Antelope Valley and Santa Clarita, Burns said. Also, few vacant lots exist in Orange County outside Irvine Ranch, which is controlled by the Irvine Co.

Although several master-planned communities will open this year in Orange County, that will improve housing supply only slightly relative to demand, said Dave Chapman, a housing analyst at Haskell & White, a Newport Beach accounting firm.

“It doesn’t come close to solving the overall housing shortage in the market,” he said.

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Los Angeles County had the highest demand for housing in the nation in the 12 months ended March 1999, while Orange County ranked fifth. The demand index is achieved by dividing job growth by the number of building permits issued.

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Market Job growth Permits Demand Los Angeles/Long Beach 77,300 12,224 6.32 New York 90,400 14,896 6.07 San Francisco 28,800 5,371 5.36 Bergen/Passaic (N.J.) 13,200 2,516 5.25 Orange County 48,100 10,901 4.41 Newark (N.J.) 21,000 4,882 4.30 Nassau/Suffolk (N.Y.) 25,500 6,018 4.24 Binghamton (N.Y.) 1,100 272 4.04 Boston 30,200 7,725 3.91 Syracuse (N.Y.) 4,900 1,431 3.42

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Source: Meyers Group