Is the minimum wage affecting rent prices?
My teacher just moved out. A couple of months later the house was back on the market, renting for an extra $900. Rents all over Boyle Heights are dramatically increasing and they are expected to continue rising. Contrary to popular belief, rents will not automatically rise because of the increased minimum wage. Rather, rents rise in neighborhoods like Boyle Heights as a result of a declining housing supply and rising demand.
Affordable housing is being built near the corner of 1st and Boyle to boost the affordable rental market. Those apartments just had a pre-application meeting for 80 units. 200 people arrived to apply. The demand for affordable housing from the public has not yet been met. Therefore, the rental prices are rising beyond most people’s ability to pay. If there was more housing, prices would decrease because landlords would be competing to fill the units. According to SCPR “it’s simple supply and demand: There are a lot of people who want to live in L.A and not enough housing… Nearly 19,000 units have been removed from the rental market since 2001 through the Ellis Act” (Huang).
Even though many tenants will soon receive $15 raise, if they build a lot of homes the rent will stay low since the landlords will be competing with each other to get people in their units and make money. If there are no new buildings built, landlords will boost up the rent. Making people move out to a more affordable place.. According to Philly Voice “So long as the real estate market remains constrained, it’s easy to imagine pay hikes getting absorbed into rent increases, as landlords realize that the whole metro area just got a raise” ( Lurye ). The rents will rise in Boyle Heights due to the minimum wage increase unless there is more housing built immediately.
I used to think that rents would rise because of the increasing minimum wage. I was wrong. The actual reason for rising rents is a shortage in the housing supply. In my opinion tenant unions should rally to tell legislators to pass laws that create more low and middle income housing which would increase supply and lower demand. Legislators should also abolish the Ellis Act to keep the demand from rising. We need more of the low and middle income housings so that tenants can be able to afford the rents cost. Once having these laws,the landlords and the tenants will come to an arrangement with the rent making it fair market. Also for people who live in the streets can have a hope to make enough money to live in a place of their own.
Huang,Josie.”LA’s high rents, evictions spurring interest in city wide tenants union.” Southern California Public Records. 6 Aug. 2015. Web
Lurye,Sharon.” Does raising the minimum wage lead to higher Rents? ” Philly Voice. 6 Aug. 2015. Web.