Roger Vincent of the LA Times points out the main reasons LA Apartment developers are on the sidelines in his piece published on 10/1/2025.
LA Apartment Construction Has Plummeted
- Apartment development in Los Angeles has fallen nearly 30% in three years, with fewer than 19,000 units under construction — the lowest level in over a decade (per CoStar).
- Developers say projects no longer pencil out, requiring $4,000–$5,000 monthly rents just to break even.
Developers and Investors Pull Back
- Even with strong rental demand and low vacancy rates, many developers have stopped buying or breaking ground.
- Institutional investors (pension funds, insurers, etc.) are redirecting capital to other cities, citing unpredictable rules and shrinking profit margins.
Policy, Costs, and Regulation to Blame
- Builders cite Measure ULA (transfer tax), COVID-era eviction limits, and fears of new policies as major deterrents.
- A proposed $32.35/hour construction minimum wage plus a $7.65/hour healthcare credit could further inflate costs.
- Material prices have surged due to tariffs (iron +9%, copper +14%) and labor shortages worsened by immigration crackdowns — a critical blow since 61% of California construction workers are immigrants (26% undocumented).
Long-Term Decline in Housing Production
- Annual housing creation has fallen for decades — from 70,000+ units in the 1950s to under 15,000 in the 2010s — leaving the region with an aging, unaffordable housing stock.
- Over the past six years, 152,000 units were built in L.A. County, but only 10% were affordable to low-income households.
- Building permits in the L.A.–Long Beach–Anaheim metro are down 68% from 2020 — the second-steepest decline in the nation (after San Jose).
Consequences for Renters
- With construction uneconomical, supply will tighten, rents will rise, and workers will move farther out, lengthening commutes.
- Los Angeles faces a deepening housing shortage as high costs, policy uncertainty, and investor flight make new apartment construction financially unworkable — even amid overwhelming demand for rental housing.
