The Diminishing Returns of Eastside-LA Gentrification
As home prices soar, can neighborhoods such as Boyle Heights remain gateways to the American Dream?
Read my most recent version of this article at Red Canary or Boyle Heights Beat
Carmen and Román Hernández immigrated to Los Angeles from México separately, but each brought with them the same dream of having a family they could raise in their own home one day. The couple met in 1973 when María, Carmen’s friend, was working at a pen manufacturing company and invited Carmen as one of her guests to their annual company Christmas party. It was held at the Century Plaza Hotel–which today is Fairmount Century Plaza.
Having gone as girlfriends, and with no dates, the ladies needed dance partners. Carmen spoke to one of the waiters hoping they could dance together. Afraid of being fired, the waiter called in his boss to dance with the ladies. Román was captain of the waiters but appeared timid when told to take his pick among the ladies waiting to dance. Carmen got up and chose for him! Eventually, the two became more than dance partners.
Román and Carmen’s life together began, and soon enough they were married and bought a home in Boyle Heights in December of 1987 for $105,000. Román was still working as captain of the waiters, and Carmen got a job as a seamstress at Z Cavaricci working directly with the designers. The housing market then, as they describe it was, “fácil”– easy. Their mortgage was only $480 a month. According to US Census Bureau data from the 2021 American Community Survey, the median monthly home payment (including utilities, insurance, and HOA fees) was more than $2,700 per month in Los Angeles, and over $2,800 per month in the New York City area. The couple called today’s housing market “pesado” — heavy.
Carmen and Román were lucky when they were starting out, but young couples today looking to find a home to build their dreams around are finding it much more difficult. The housing market is out of reach for most Gen Zers (people born from 1997 to 2012). Formerly affordable neighborhoods such as Boyle Heights, where generations of Latinos and immigrant Jews before them claimed a piece of the American pie, are getting gentrified beyond recognition and affordability. Gentrification is moving further East and North into working-class neighborhoods such as Boyle Heights that were once affordable to aspiring Latino communities, Gen Zers (and many Millennials before them) are finding home ownership, even in “affordable” neighborhoods, increasingly inaccessible.
Homeownership is not just about the American Dream for Gen Z. States with higher real estate prices like California, along with Massachusetts and Washington, have the lowest share of Gen Z homeowners, according to a report by Porch.com. However, Gen Z is the most disadvantaged group of potential homeowners due to the challenging real estate market. Newshire Investments Inc., is a company that invests in higher and denser housing in California. Their mission statement claims that they strive to revitalize Los Angeles and bring “positive, innovative, and necessary changes.” They target neighborhoods that “lack” new residential housing construction. Companies like Newshire claim to be innovative but the homes that keep the neighborhood vibrant or sustained are being demolished for “tasteful” — some might say utilitarian–designs.
This form of gentrification is putting pressure on a neighborhood that has been a hallmark of working-class aspirations. According to Nan Roman, CEO of NAEH, rental aid should be provided to people who earn 30% of the area median income. Though Roman claims to have no solution to solving the housing crisis, this would at least be innovative and sustainable.
The development of denser housing, apartments and townhomes, makes it somewhat more affordable for Gen Zers compared to renting or buying a single-family flipped home. And there is nothing wrong with living in a townhome or an apartment, in fact, some Gen Zers might even prefer it. But this raises the question of whether denser housing should be focused on intensively in working-class neighborhoods. It would make housing more affordable, but it would be exploited by developers, like Newshire Investors, who want to charge more per square foot for smaller dwellings.
The adverse impact it currently has on neighborhoods is increasing congestion and traffic. Carmen and Román mentioned they are opposed to apartments in their neighborhood due to limited parking spaces and the change of environment. To see modern homes or apartments in working-class neighborhoods changes the sense of place, culture and character is removed.
A 2019 Forbes article explained that the 18-year-old Gen Zer during 2019, who wants to buy a home by the time they are 30 years old will need to save $304 per month for the next twelve years to qualify for a loan with a minimum 10 percent down payment, plus closing costs. According to Hommati.com, “Gen Z’s biggest obstacle to saving for a down payment will be student loan debt.” About 44 million Gen Zers will be on the lookout to rent their own apartment over the next few years. Due to financial circumstances, Gen Zers will have to seek affordability primarily in the rental market, shifting them to communities that are racially and ethnically diverse.
These graduates are facing salaries that are not competitive nor rise as quickly as the costs of living. Gen Z’s current median salary is $33,800 per year, including those with college degrees. Currently in California the Median annual earnings for those 20–24 years old is $38,106.69. The future of home ownership in Los Angeles looks foggy for Generation Z. The future of home living might be living in a van and traveling across the country, or renting an apartment with three roommates, or never settling down to stay in one place. Whatever it is, neighborhoods like Carmen and Román’s will continue to grow with townhouses dominating the housing market. With the rise of remote work, Gen Z may place more value on lifestyle flexibility than saving the $304 for 12 years to come up with a downpayment on a home that comes with an increasingly high interest rate on the loan.
The future of home living might be living in a van and traveling across the country, or renting an apartment with three roommates, or never settling down to stay in one place.
Some Gen Zers might already know homeownership might not be for them still acknowledging the amount of freedom, potential tax benefits, and pride it can provide. If a Gen Zer has the financial means to buy a home, it can play a significant role in what they may consider part of their success. But with every bit of success comes new responsibilities and the cost of peace of mind, which might already be too expensive.
The real-estate app Zillow provided this example in Boyle Heights, is this home that was flipped and is now selling for an estimate of $751,100. Twenty years ago, the house’s assessed value for property taxes was under $90,000. Since the late 1980s, several recessions have wreaked havoc with stock markets as stable investments and housing stock has become an investment commodity.
Now, it is common to come upon flipped homes asking above the median mortgage rate. The family home on Gleason Ave was built in 1910 and remodeled in 2019. It was bought in 1980 for $31,000, a 23.2% increase from today’s estimated mortgage. Today an individual or household would have to make $250,000-$300,000 a year to be able to afford this home. It is recommended that young and new homeowners should not spend much more than 3X their annual income on a home after putting 20% down, as dictated by the ‘30/30/3’ rule.
Boyle Heights, a predominantly Latino/a/x community, is transitioning into a hipster destination — much like Silver Lake, Echo Park, Highland Park and other formerly affordable neighborhoods before it. At risk, according to opponents of gentrification, is a so-called whitewashing of the neighborhood’s cultural roots, as well as its historic roots in providing an entryway into homeownership and the middle class for immigrants. While millennials are buying homes in this somewhat competitive city to live in, they are uninformed of the struggles and stories of their former and current working-class neighbors.
A multi-unit home within a two-minute walking distance from Carmen and Román’s house was bought in April 2021 by Newshire Investments Inc., and began construction in December 2022. When the property was bought, two of the homes were vacant, and one family lived in the home. I asked one of the investors if there was any help made available to the previous residents. “That might have been arranged, but I don’t have any specifics to it,” he said.
Boyle Heights is a booming real estate market and evictions, and the rise in rent costs, are even becoming historical time periods and stories. According to Zumper, as of March 2023, the average rent for a 1-bedroom apartment in Los Angeles, CA is $2,395. This is a four-percent increase compared to the previous year. Affordability used to be LA’s secret sauce. It’s not there anymore, we are losing our place as a destination for all the re-energizing power that immigration has brought to the city for decades.
We Latinos continue pushing for our dreams and share our history in the United States with our children so that they don’t lose their roots, that is what we do.
In 2017, 44-year-old Oscar Argüello wrote the play Sideways Fences, which explores issues around gentrification of Boyle Heights. “I feel like a lot of our stories are not being told,” says Argüello.
The play focuses on a young unmarried couple, Sol and Estebán, who face eviction from their apartment and are soon to be parents. It is partly Argüello’s own story: years ago, he got evicted from his apartment and a $2,000 fee was placed in an escrow account as soon as he moved out. When writing the play, Argüello wrote the scene about his eviction, word for word, for the audience to understand the challenging economic pressures that currently exist for working-class residents of neighborhoods that are being gentrified. In the play, Estebán makes it known that “People are leaving. No one can afford anything.” As newcomers and house flippers move to Boyle Heights, rent and mortgage rates increase. According to Zumper, over the past month, the average rent for a studio apartment in Boyle Heights increased by four percent to $1,497. The average rent for a one-bedroom apartment decreased by one percent to $1,825, and the average rent for a 2-bedroom apartment decreased by four percent to $2,350.
It is no surprise that Los Angeles has always carried the baggage of a housing crisis: a shortage of affordable housing, housing market increases, and “redlining.” Low-income Angeleno renters are the most vulnerable to displacement. Rudy Espinoza, executive director of the nonprofit organization Leadership for Urban Renewal Network says, “It’s a symptomatic…capitalist system that is run on a speculative real estate market where values of property magically go up every year. It’s a system that helps people who already have money — and it’s leaving the majority of us behind.” Businesses that are new to neighborhoods like East Los Angeles must focus on what they can do to be integrated with the community, how they can serve the needs of these low-income residents, no one is asking for another franchise nor $6.75 coffee.
Many Latino/a/x families and individuals here in Boyle Heights have grown up to admire their heritage, the attributes Latin culture brings to their community. Carmen and Oscar would have no reason to fear the future of their neighborhood if the roots were not being ripped apart. Although artists like Oscar Argüello, residents like Carmen and Román, murals, and street vendors continue to remind us of and defend the deep Mexican and revolutionary history that Boyle Heights has, to serve its Latino community, we are still confronted with change.
For a bit more than a decade, Carmen and Román’s routines have been etched into this neighborhood: their daily walk to McDonald’s for morning coffee, chats with other neighbors in their home, gardening and maintaining their lawn, raising their family. I asked Carmen and Román, “What makes Boyle Heights special?”
Carmen, sitting up with a smile, says, “We Latinos continue pushing for our dreams and share our history in the United States with our children so that they don’t lose their roots, that is what we do.”
Watch the Documentary: https://www.youtube.com/watch?v=PNSNCPOnROc
