Housing has become prohibitively expensive in some of America’s best-known tourist towns, and five California communities are near the top of the list of the most expensive places, according to a new study by the Wyndham Financial Group.
Carmel ranks highest among California’s tourist towns that suffer shortages of affordable housing, and is fifth highest in the nation. Aspen, Colorado led the national list (the average house price there is now $2 million). Other California towns in the top 50 are Avalon on Catalina (15th), aptly named Dollar Point at Lake Tahoe (19th), Cayucos (27th), and Mammoth Lakes (35th).
The rankings derive from a formula based on housing prices, rent levels, and local incomes.
“This is a dangerous situation,” said William Hettinger, Wyndham Financial’s president and CEO. “Skyrocketing prices of second homes drive up all housing costs, forcing year-around residents to move. Local businesses can’t find or keep workers as rents become unaffordable. As a result, communities risk losing the sense of community and quality-of-life benefits that made them attractive in the first place.”
It’s a basic economic principle: when demand increases, prices rise. It’s happened in Aspen, Carmel and Avalon, and it’s happening here now. The most expensive houses in the Los Angeles area are not in the Palisades or Malibu or Bel Air or Beverly Hills; they’re north of Montana in Santa Monica. It’s a lovely area, though no lovelier than portions of the Palisades, Malibu, Bel Air and Beverly Hills, but Santa Monica is a tourist town and the others are not.
A tourist town with rent control is not only a contradiction in terms, it’s a conflict of interests.
In 1979, Santa Monica voters passed one of the toughest rent control ordinances in the nation. In 1982, Santa Monicans for Renters’ Rights won a majority of the seats on the City Council and, that same year, without voter approval, the City created the Convention and Visitors Bureau and the Hotel District and set about to turn the old beach town into a slick “destination resort.”
Either the powers that were didn’t know or chose to ignore the fact that rent control and tourism are clearly antithetical. What were they thinking of? Perhaps they thought they possessed some superior wisdom that would enable them to control the boom they triggered, but, by definition, booms can’t be controlled.
And so inexpensive apartment buildings here have been and are being replaced by expensive condos, house prices all over town have risen and continue to rise, and the stock of affordable housing has shrunk dramatically.
When H.G. Wells came to this country early in the 20th century for a look around, he said, “All they have done is make feudalism efficient.” Nothing is more perfectly feudal than a full-blown tourist town in which a relatively small number of very rich people are served by a large number of very poor people.
Santa Monica isn’t nearly there, of course, because, for one thing, beach town residents are notoriously contrary. But unless it changes course now, it will follow Aspen and Carmel into the real estate stratosphere, and eventually it will be inhabited exclusively by very rich, terminally chic transients.
We speak from experience, as we once lived in Aspen and left just as its boom was building, and came home to Santa Monica just after the rent control ordinance passed and the SMMRs were rising. Then and there, we were as optimistic about Santa Monica’s future as we were pessimistic about Aspen’s fate.
The rather primitive, but perfectly located Victorian cottage we lived in in Aspen might have fetched $40,000 in Denver. In Aspen, circa 1979, it sold for $367,000, and, a year later, after a quick rehab, it was resold for $1 million. Rents of $60 to $100 a month were not uncommon in Aspen in the early 1970s, but they rose as rapidly as house sale prices. Within several years, many of the ski bums who did the scut jobs – waiters and waitresses, hotel maids and bellmen, ski patrolmen, shop clerks, bartenders – had been priced out and either found digs down the valley or left the area.
It wasn’t long after that that a new luxe hotel imported Latino workers from the southwest and housed them in a dormitory for the winter season.
According to the Wyndham study, when the market fails to provide a healthy mix of housing, as it did in Aspen, municipal intervention is required, and that’s what happened in Aspen. Growth management regulations were put in place and the number of affordable housing units grew from 179 in 1979 to 741 in 1989 to 1943 in 2003. 64 percent of the population now lives in affordable housing. Still, Aspen remains the most expensive housing market in America, and “Euro-labot” and Latino undocumented workers are still imported to do the seasonal and menial jobs.
As Santa Monica is part of the Los Angeles nation, whose population is about 3 million, our situation will never be that dire, but the fact that the city’s population of 84,000 triples daily to 250,000 is surely proof that an increasing number of people who work here cannot afford to live here.
And we hear regularly about young people who were born and grew up here, but can’t afford to live here when they go out on their own.
A large number of residents cherish this community and value its diverse mix of people. City officials speak regularly about their commitment to building new affordable housing, but the quickest and best means of restoring a healthy balance and maintaining the idiosyncratic character of Santa Monica is to preserve existing affordable housing by subsidy and other means.
It has taken 130 years to make Santa Monica, and it could be unmade in a decade, unless we act now to defuse the boom and restore balance, equity and sanity.
We knew it was time to leave Aspen when a friend jammed herself and her four children and two dogs into a one-room studio on her property because her house was “too valuable” for them to live in, and rented the house to an affluent young couple.
When a previously rational woman, who has plenty of money, elevates the value of her house over the well-being of her children, a kind of madness has taken over.
It doesn’t have to happen here, but it may – unless we act decisively and boldly now to avert it. Business as usual won’t do it.Ed. Note: The data from the Wyndham Financial Group is contained in a new book, “Living and Working in Paradise” by William S. Hettinger, Thames River Publishing.