Los Angeles is shrinking. About 10,000 people are leaving the city every year, and another 50,000 leave the surrounding county. This has been going on for over a decade. And yet over that same time frame, rents have nearly doubled.
How is this possible?
Shouldn’t fewer people mean lower demand for housing? Even if the city didn’t build a single additional unit, if the number of people in need of housing goes down, shouldn’t the price of housing go down, too?
One would think. But it turns out that the way Los Angeles is shrinking causes the demand for housing to go up, not down.
The problem for Los Angeles is that, due to Democratic Party mismanagement and incompetence, the city is a terrible place to raise a family. The schools struggle to teach children how to read, the homeless have overtaken too many parks, and government unions have made basic municipal services needlessly expensive and slow.
This means the people most likely to leave Los Angeles are young families, and those most likely to stay are young single people and aging retirees. When your city is a good place to raise a family, your houses are filled with at least two, often three, sometimes even five to six people. Mom, dad, and their children can all live under one roof.
But single people are just that: single. They live by themselves. And an aging retired population means more widows and widowers living alone. Ten single people need ten homes. Two families of five need just two. So as young people wait longer and longer to get married, and more and more of them don’t get married at all, the demand for housing actually goes up even as the population ages and shrinks.
Of course, Los Angeles also fails to build enough housing. But shrinking household size helps explain why even population decline has not brought relief.
And that is exactly what is happening in Los Angeles County. In the past 10 years, the median age of Los Angeles residents has risen by 3.5 years, while the average household size has fallen from 2.98 to 2.81.
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“A growing housing stock is accommodating fewer people,” Public Policy Institute of California senior fellow Hans Johnson told the Los Angeles Times.
Population decline is not a rent-control fairy godmother. When families flee and singles stay, fewer people can still mean more households chasing the same scarce apartments. Los Angeles has managed the neat trick of shrinking and getting more expensive at the same time. Only Democrats could make subtraction cost more.