It’s Been a Home for Decades, but Legal Only a Few Months

On paper, the converted garage behind the Martinez family home in the Boyle Heights section of Los Angeles is a brand-new unit of housing, the product of statewide legislation that is encouraging homeowners to put small rental homes on their property and help California backfill its decades-old housing shortage. Two stories tall with 1,100 square feet of living space that is wrapped in a curved exterior wall, adorned with pops of pink around the windows and decorative white squares, it looms over the squat main house as a statement of something different behind a chain-link fence.

The inside tells a longer story. For years the unit was illegal, built clandestinely in the mid-1990s by Bernardo and Tomasa Martinez as part of a $2,000 project that turned the garage into a cold but habitable unit with a bed and bathroom. The family rented it for $300 to a friend, then $500 to Bernardo Martinez’s brother, using the money to offset their mortgage and weather unemployment during the Great Recession.

Eventually the unit housed their son, Luis, who lived there several years later while he was getting a master’s degree in architecture. Luis Martinez designed the latest conversion and, during an interview on the driveway, noted that the garage may have become a legal residence in 2020, but it has long been someone’s home.

“The city rules are finally catching up to how these places are being utilized,” Luis Martinez said.

Until last year’s renovation, the Martinez family’s backyard home belonged to the shadow inventory of unpermitted housing that has swelled across Los Angeles and other high-priced cities as affordable housing shriveled. Amateur developers build them for profit. Homeowners build them for family or to help with the mortgage.

Philip Cheung for The New York Times

In a tight and expensive housing market, where homes are desperately needed but also hard to build, people of every income level have decided to simply build themselves. The result is a vast informal housing market that accounts for millions of units nationwide, especially at the lower end.

“This is one of the most significant sources of affordable housing in the country,” said Vinit Mukhija, an urban planning professor at University of California, Los Angeles.

Over the past two years of the pandemic, as policymakers have struggled to contain the spread of disease in overcrowded housing and prevent widespread evictions among vulnerable tenants, Covid-19 has laid bare how precarious — and poorly understood — the United States housing market has become. A little over 100 million people live in rental housing across the U.S., but nobody knows exactly how many people are at risk of eviction, how many lose their housing without a formal notice, or even much about pricing trends.

Almost nowhere is this disconnect greater than with informal units, which cities tacitly accept as a crucial part of their housing supply but don’t exactly condone and often empty or demolish if someone complains. This practice creates a kind of legal gray area in which tenants and owners don’t want to be found out and can both find it difficult to access tenant protections or financial aid, such as the $46 billion in pandemic rental assistance created by federal stimulus programs.

Surveying the surrounding neighborhood from the roof deck of his old garage home, Luis Martinez counted off a few of nearby informal units: A corrugated steel addition that consumed the yard of a house a few lots away; a roll-up garage door that hides an unpermitted home down the street; the remnants of a shower that was once inside a backyard unit, demolished after city inspectors discovered it.

Los Angeles County, home of 10 million people, has at least 200,000 informal units, according to researchers at University of California, Los Angeles. That’s more than than the entire housing stock of Minneapolis.

Philip Cheung for The New York Times

Some are rudimentary structures that lack plumbing. Some are two-story pool houses that rent for several thousand dollars a month. Off-the-books housing shows up in rich neighborhoods and poor neighborhoods, everywhere it is needed.

Which in California — home of the $800,000 median home price and sprawling, roadside homeless camps — can seem like it is everywhere. Over the past decade, the state has added a little over three times as many people as housing units and is far below the national average in housing units per capita, according to a recent analysis from the Public Policy Institute of California. Population growth has slowed and even fell last year, but the supply of homes is so low and the demand so great that prices only continue to rise.

Looking to add units, the state legislature has spent the past five years passing a flurry of new laws designed to increase density and speed the pace of new construction. They’ve vastly lowered regulatory barriers that prevented backyard homes and essentially ended single-family zoning with legislation that allows duplexes in most neighborhoods across the state. A byproduct of these laws is that there is now a path for existing units to get legalized, a process that can require heavy renovations and tens of thousands of dollars. Cities including Los Angeles and Long Beach have also created new ordinances that clear the way to legalize unpermitted units in apartment buildings.

As a designer who specializes in residential structures, Luis Martinez has lived this at home, and has now made it his career. His design business, Studioo15, has surged over the past two years as residents across Los Angeles have used the new state laws to add thousands of backyard units. Yet about half of his clients, he said, are people like his parents who want to have existing units legalized.

Bernardo and Tomasa Martinez, both in their early 60s, immigrated to Los Angeles from Mexico in 1989. Working in the low-wage service sector — she was a waitress; he worked as a laborer loading a truck — they settled in a two-bedroom house in South Los Angeles that had four families and 16 people. Luis Martinez, who crossed the border as a child, was surrounded by love and family, in a house where money was tight and privacy nonexistent.

Eventually the family was able to buy a small three-bedroom in Boyle Heights, on the east side of Los Angeles. It sits on a block of fading homes that have chain link fences in the front and a detached garage out back. To supplement the family income, the Martinezes converted the garage into a rental unit without a permit. Bernardo Martinez and a group of local handymen raised the floor and installed plumbing that fed into the main house, while Luis helped with painting.

Luis remembers that nobody complained, probably because the neighbors were doing the same thing. “It was normal,” he said, “like, ‘I live in the garage’ and some garages were nicer than others.”

Mr. Martinez went to East Los Angeles College after high school, then transferred to the University of California, Berkeley, where he got an architecture degree in 2005. In the years after graduation, when the Great Recession struck, his father lost his job and, after a spell of unemployment, took a minimum wage job mowing the lawn at a golf course. To help with bills, they rented the garage unit to Bernardo Martinez’s brother for $500 a month. With the minimum wage, you can’t afford to pay a mortgage and food for everybody,” Tomasa Martinez said.

The point of informal housing is that it’s hard to see — it is built to elude zoning authorities or anyone else who might notice from the street.

Jake Wegmann, a professor of urban planning at the University of Texas at Austin, describes this as “horizontal density,” by which he means additions that make use of driveways and yard space, instead of going up a second or third floor. Because both the tenants and owners of these units don’t want to be discovered, there is essentially no advocacy on behalf of illegal housing dwellers, even though the number of tenants easily goes into the millions nationwide.

Their presence is often logged in the form of proxy complaints about city services. “We talk about there not being any parking on the street, we talk about sewer pipes deteriorating, we talk about there being overcrowded schools, but oftentimes unpermitted housing is underlying all this,” Dr. Wegmann said in an interview.

Ira Belgrade lives about ten miles west of the Martinezes in a Mid-Wilshire ZIP code where the typical home is worth $2 million (in Mr. Martinez’s neighborhood, it’s less than $600,000). His economic calculus was still the same.

Behind his house sits a two-story office and entertainment room that has three pairs of French doors and is flanked by rows of ficus trees that wrap the yard in shade. Mr. Belgrade and his wife used to run a talent management business from the building, and never considered renting it.

Then, Mr. Belgrade’s wife died in April 2009 after a long illness. Business started declining and the mortgage on his house became a struggle. “My life was like a wreck and I thought ‘Well, you know, if I can make this into a full apartment I could just rent the thing and I could chill out,” he said. “The city said ‘No you can’t have it’ so I said ‘Screw it’ and did it anyway.”

Philip Cheung for The New York Times

He hired a contractor to install a full kitchen and rented it for $3,650. Nobody noticed for four years. Then came an anonymous complaint, and he got tagged with a code enforcement violation.

Mr. Belgrade said he spent three years struggling to get the unit legalized. At one point, he walked around his neighborhood taking pictures of 28 backyard homes that he believed were also not on the city’s books, in preparation for a mass complaint.

“My argument was, ‘If you shut me down, you have to shut down these other 28 homes,’” he said. “It was total self-preservation.”

Mr. Belgrade held out long enough to get the unit legally converted under the state’s new backyard unit laws. Along the way, he learned so much about city and state housing law that he acquired a new career. Instead of managing actors or casting movies like Army of Darkness, Mr. Belgrade now runs a consultancy called YIMBY LA, for “Yes In My Back Yard Los Angeles,” which advises people building new backyard units and also helps get permits for people who had them on the sly. The company’s tagline: “Home Sweet Legal Home.”

Through ten years as a code compliance officer for the County of Los Angeles, Jonathan Pacheco Bell estimates that he entered about 1,000 different homes, most of them in the unincorporated areas around South Los Angeles. He handed out violation notices and watched illegal housing get destroyed or vacated.

But, after a decade of enforcement work, he said he came to accept that zoning codes become something of a fiction in the face of an affordable housing crisis. Many informal units are substandard or unsafe. But most, he said, are not. And until recently, the county’s policy of removing them was, in his view, creating more problems than it solved.

Mr. Pacheco Bell is now a consultant who gives frequent talks at planning conferences. In those presentations, he tells the story of a family he cited in 2016, just as the state laws on accessory dwellings were changing. The family patriarch had died in a bus crash in 2009 and, to supplement her income, the widow hired a neighbor to build a backyard home. It cost $16,000 to build and she was able to rent it for $500, providing years of income for her family and one unit of affordable housing in a region that badly needed it.

Mr. Pacheco Bell showed up after an anonymous complaint. The unit had plumbing and a kitchen. There was a crucifix on the front door, magnetic letters on the refrigerator and a child’s homework assignments taped to the wall. The home was usable and well-maintained, but was in violation of zoning codes because it was too close to a fence. Mr. Pacheco Bell wrote the unit up and returned a few months later to confirm it had been demolished. Walking around the backyard, and seeing the outline of the home and the rubble, made him question the job he was doing.

“And as a planner I had a crisis of consciousness, like ‘How many people have I made homeless?” he said.

Los Angeles has extended many tenant protections to residents of illegal units, but advocates for tenants say most renters aren’t aware of them. Landlords say they live in fear of being outed by tenants who can decline to pay rent until they get the unit permitted, a process that can take months.

It all creates a market in which relationships are central to its function and proximity to each other can cut both ways. Sometimes tenants are treated as roommates or extended family, trading favors with their landlords and paying a low monthly rent. Other times, they live with abusive landlords who can steal food from refrigerators or expect them to do unpaid chores, threatening eviction when they don’t comply.

“Renters have to make a choice: Are you going to live in a place that costs more? Or do you put yourself in a situation where you’re likely to have overcrowding and you might have restrictions over things like having guests over?” said Silvia González, director of research at the Latino Policy and Politics Initiative at UCLA.

Dr. González is unusually close to her research: She grew up in Pacoima, a neighborhood of working-class Latino families in the San Fernando Valley, and spent much of her childhood living in an unpermitted home behind an aunt’s house.

In a study for the nonprofit Pacoima Beautiful, she and other researchers found that these units can act as a bulwark against gentrification because they create low-cost housing and allow families to pool resources, as the Martinez family did. The benefits of legalizing them are clear enough: Units become safer, value is added to homes and tenants get the security of a sanctioned unit.

Now that the law has changed, however, upstart developers are rushing to build new units and are bidding up parcels where they can be developed. This has caused fears that the once-illegal housing density serving as a source of last-resort shelter in many neighborhoods could become an engine of displacement. To head that off, Pacoima Beautiful recommended that cities and the state create low-cost financing mechanisms to encourage homeowners to get permitted.

It took the Martinez family a decade to dig out from the Great Recession, but over time Bernardo Martinez worked his way back into the logistics industry and now runs an import/export business that moves clothes, toys and other merchandise between Los Angeles and Mexico. The family built back their savings, and was able to finance the $200,000 backyard unit.

Boyle Heights remains an epicenter of L.A.’s gentrification battles, and Luis Martinez has found himself embroiled in them. In 2017, he purchased a duplex close to his parents and commenced an owner move-in eviction so he could live in one of the units. During the dispute, protesters marched outside his parents’ house and both the tenant who left and the one who remained sued him, alleging the duplex was uninhabitable and that he refused to fix it. Mr. Martinez disputed the allegations and settled earlier this year.

The newly legalized unit behind his parents’ house is unlikely to assuage any gentrification fears. The building’s wavy surface looks like it landed in Boyle Heights after taking the wrong exit, and inside there are marble counters and a wine fridge.

It sits empty now, but Mr. Martinez said his family plans to rent it out someday — he guesses they could get $2,500 in monthly rent — so his parents can retire and let the yard work for them.

Source: Economy -


Happy ‘bearday,’ Bitcoin: It’s been 3 years since BTC bottomed at $3.1K

Wall Street financial advisor LionTree explores crypto payments