LOS ANGELES — California’s housing crisis is no longer defined by a lack of policy ideas or technical know-how. Instead, it is increasingly shaped by political hesitation, zoning choices made generations ago, and a regulatory and fiscal framework that often undermines the very goals elected leaders say they support.
Recent commentary and reporting paints a picture of cities caught in a cycle of scarcity, rising costs and institutional ambivalence, even as the consequences grow more severe.
In Los Angeles, housing production remains near a 10-year low. The city issued just 8,714 residential permits in 2025, a figure that stands in sharp contrast to faster-growing cities such as Austin, Texas. Per capita, Los Angeles is producing roughly five times fewer homes than Austin, according to a Los Angeles Times opinion column by Jesse Zwick, the Southern California director of the Housing Action Coalition.
Zwick pointed to diverging rent trends that have reshaped daily life for residents. In Austin, rents have fallen 21% over the last three years and have returned to pre-pandemic levels. In Los Angeles, rents are up 28% since March 2020.
For many households, Zwick wrote, that gap represents the difference between staying housed and being forced out.
The persistence of low production comes despite years of rhetoric framing housing and homelessness as emergencies. Zwick argued that the city’s chronic shortage is not the result of limited expertise or a lack of planning documents, but of political leaders’ reluctance to clearly and consistently embrace housing growth as a public good.
He cited opposition from both Mayor Karen Bass and developer Rick Caruso to SB 79, a state law that legalized denser housing near major transit stops, as emblematic of a deeper dysfunction that cuts across ideological lines.
That reluctance, Zwick contended, has deep roots.
He traced Los Angeles’ anti-growth posture to the late 1960s, when environmental concerns, fears about density and racialized anxieties about urban change converged with progressive politics. A broad national consensus emerged that building fewer homes was preferable, an assumption that reshaped land-use policy across the region.
In Los Angeles, that consensus translated into sweeping zoning restrictions. Under leaders such as Zev Yaroslavsky, the city adopted measures like Proposition U that dramatically reduced allowable growth.
Zwick wrote that Los Angeles effectively cut its potential housing capacity from about 10 million people to roughly 4 million. Yet births continued, jobs multiplied and migration into the region persisted. The math no longer worked.
Over time, rents climbed sharply, homelessness surged and lower-income households were pushed farther from job centers, often relocating to places like Bakersfield, Victorville, Las Vegas and Phoenix.
City leaders began to acknowledge that more housing was needed, but, Zwick argued, that acknowledgment was hedged with caveats: only if infrastructure was unaffected, only if neighborhood “character” was preserved, only if parking was untouched, and only if projects met increasingly narrow and often contradictory conditions.
That ambivalence, Zwick suggested, is embedded in the city’s approval systems. He argued that Los Angeles’ regulatory environment is structured in ways that discourage construction through delay, uncertainty and risk.
Even projects that comply with zoning and building codes can face years of discretionary review, appeals and revisions. Zwick cited data showing that the average housing unit in Los Angeles takes 1,784 days to complete.
Such delays carry real financial consequences. The longer and more uncertain a project becomes, the higher the costs and the greater the returns demanded by investors.
Zwick referenced a Rand Corp. analysis identifying regulatory delays as a major factor in why housing costs far more to build in California than in Texas. He also criticized local taxes, impact fees and inclusionary requirements that he argued function as disincentives to investment by placing the burden of funding infrastructure on new projects rather than spreading costs broadly.
Similar structural issues surfaced in San Diego, where fiscal stress is colliding with housing scarcity.
In an opinion column for Voice of San Diego, Ricardo Flores, executive director of LISC [Local Initiatives Support Corporation] San Diego, described a grim budget outlook.
The city of San Diego faces a projected $110 million deficit, the county is forecasting a $138.5 million deficit and San Diego Unified School District is projecting a $47 million shortfall.
Flores argued that debates over raising taxes and fees have dominated discussions of the budget crisis, even as voters remain wary of new financial burdens. He proposed a different approach: zoning reform that allows denser housing on smaller lots, particularly in neighborhoods currently reserved for single-family homes.
Drawing on an analysis commissioned by LISC San Diego and conducted by London Moeder Advisors, Flores wrote that smaller-lot townhomes could be substantially more affordable while generating significant new property tax revenue.
The analysis found that a family-sized townhome built on a lot of 1,000 square feet or less would cost 42% less than existing single-family homes built on lots of at least 5,000 square feet.
More striking, Flores wrote, were the fiscal implications. London Moeder Advisors concluded that if just 4,000 of San Diego’s roughly 280,000 single-family lots were redeveloped into smaller-lot townhomes, the resulting property tax revenue would amount to hundreds of millions of dollars annually.
Because property tax revenue is shared among cities, counties and school districts, the benefits would extend across local governments.
Flores argued that San Diego’s single-family zoning rules date back to 1923, a period when land values were far lower and the city’s economic profile was dramatically different. In the century since, investments in the military, higher education, biotechnology and other sectors have driven up land values.
Yet, Flores wrote, zoning laws still require residents to purchase or rent large parcels of land, pushing ownership beyond the reach of many households. Allowing smaller lots, he argued, would align housing supply with economic reality while strengthening public finances.
While Los Angeles and San Diego grapple with zoning and density, reporting from The Sacramento Bee underscores another persistent flashpoint in California housing policy: development fees.
In Elk Grove and Sacramento, affordable housing projects illustrate how those fees can both constrain and enable construction, depending on local policy choices.
When Eden Housing began planning an affordable senior apartment complex in Sacramento’s Oak Park neighborhood, the project initially faced about $700,000 in development-related fees.
Through automatic waivers and other reductions, the final bill fell by approximately $620,000, according to Andrea Osgood, Eden Housing’s chief of real estate development. “It may seem small,” Osgood said, “but every penny really matters in the end.”
A report from UC Berkeley’s Terner Center for Housing Innovation analyzed nearly 700 subsidized housing developments that received state tax credits.
Over a four-year period, those projects paid more than $1.2 billion in combined impact fees, averaging nearly $19,800 per unit. A separate Rand Corp. report found even higher averages statewide, with impact fees reaching $29,000 per unit in California, compared with $1,000 in Texas and $12,000 in Colorado.
Housing advocates and developers argue that such fees are excessive.
“Impact fees for housing in California are way too high,” said Milo Terzich, a vice president of development for USA Properties Fund. Others counter that the fees are essential to funding infrastructure and public services. “When a city is imposing an impact fee it is going to support streets, sewers, water infrastructure and utilities, a whole host of essential services,” said Jason Rhine, a lobbyist for the League of California Cities.
Defenders of the current system also note that impact fees represent a small share of total development costs.
The Terner Center found that the fees amounted to less than 5% of total costs in the projects it reviewed.
“I understand that impact fees are a convenient political scapegoat, but in reality they are a rounding error in the California housing market,” Matthew Duarte, executive director of the California Association of Recreation and Park Districts, said in an email.
Yet the same report offers ammunition to critics.
Terner Center researchers concluded that eliminating impact fees for the reviewed projects could have funded the construction of roughly 5,000 additional homes over four years. Supporters of reform argue that, in a state facing an acute housing shortage, those trade-offs deserve closer scrutiny.
Taken together, the debates playing out in Los Angeles, San Diego and Sacramento highlight a central contradiction in California housing policy.
The state has set ambitious housing goals and acknowledged the severity of the crisis, but local policies often remain misaligned with those objectives.
Zoning restrictions, prolonged approvals and contested fees combine to constrain supply even as leaders emphasize affordability and equity.
As Zwick argued in the Los Angeles Times, the defining question is no longer whether cities understand how to build more homes.
It is whether they are willing to align political priorities, regulatory systems and fiscal policies around the simple act of saying yes to housing — and to accept the consequences of continuing to say no.
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Stop it – enough with the good news already! :-)
Also good news – 1.6 kids per woman (nationwide), less immigration, etc.
You mention Los Angeles – a place that (should have) already restricted sprawl starting decades ago. Truth be told, they’re STILL not doing so in that area (e.g., Tejon Ranch).
Also, THIS entire area (the Sacramento Valley) – still sprawling as they have been for decades.
Perhaps sprawl is not the measure that needs to be analyzed?
It’s ALREADY not being analyzed in a serious manner, and very little is being done to stop it (especially in the valley).
One of the articles that I analyze for example, looks into the issue of denser housing, which is part and parcel to the debate over VF and pushes the idea of using zoning reform to expand “gentle density” in single-family neighborhoods — often focusing on smaller lots and enabling townhomes — as a way to address both the housing shortage and budget deficits without raising taxes. It seems that by you focusing on sprawl, you’re missing a much more interesting debate both locally and elsewhere.
That is less damaging than sprawl, but is also not sustainable. It’s also generally more expensive (e.g., to tear down existing buildings, try to tie into existing infrastructure, split lots, etc.). And of course, neighbors don’t like it, for multiple reasons.
I reject the underlying premise; that there’s actually a need to keep growing (see 1.6 kids, for example).
Hopefully, the next administration will also keep immigration in check. Hopefully, without shooting anyone who supports illegal immigration (and therefore feels compelled to interfere with agents).
And that takes you out of most of the conversation
If you say so.
Obviously, we are talking about two different things in regard to your “housing crisis”. I look at demand (and what creates demand), while you look at supply.
You are the one arguing about sprawl in a density article
The justification for both is the same – which I reject.
Also, some (including some in Davis) want to expand the city onto farmland, and then call it “density” (or “infill”).
Which of course is how we got “density” and “infill” in the first place.
That’s like saying the justification for incarceration and rehabilitation is the same and ignoring means and ends in the process.
The justification for incarceration and rehabilitation do share some common goals, but are not exactly the same. Incarceration is partly about “retribution” (some call it “justice” – but I think that’s a misuse of that word).
There is not a similar justification underlying both spawl and infill. There are voluntary choices being made which impact demand.
Perhaps a better comparison is the choice to commit a crime, or the choice to create a “housing crisis” by failing to consider how demand is created. And how inequalities in income and assets also contributes to that. And how inflation in general impacts all costs, which then impacts those at the lower end of the wealth spectrum more significantly.
That’s a good point. I was mainly thinking in terms of a common need to address a problem but coming at it from very different approaches, which is how I see infill and peripheral housing (sprawl I see as a perversion of peripheral housing whereas you seem to view the two as one and the same). In any case, the point raised in this article focused more on approaches to density and infill rather than peripheral housing.
In Davis, the issue of peripheral housing has become the focal point, again due to 25 years of Measure J which has largely consumed all of the infill sites + the economics of redevelopment (without an RDA) and the cost of density in spots where current structures would have to be torn down and then densified.
Infill sites within any city are never “consumed”. If they were, places like San Francisco would be in big trouble regarding the state’s push for housing.
What ends up occurring is exactly what you describe in this article and your comment – lack of feasibility. Meaning that the state’s “requirements” are fake ones.
Something like Trackside still isn’t even penciling out. Davis is not wealthy enough to enable dense infill.
Places like San Francisco can become increasingly occupied by the wealthy, which then enables some high rise residential development to “pencil out”.
But the real underlying reason for all of that is the pursuit of wealth outside of the housing market (business/economic development in a given area).
So in a sense, Davis is not expensive enough to justify dense infill.
“So in a sense, Davis is not yet expensive enough to justify infill.”
Ironically, I think that’s true. There is also the geographic issue where San Francisco has a hard constraint while Davis has shall we say, artificial scarcity.
Truth be told, I’d rather see it become valuable enough for the owners of housing in the Stanley Davis development, for example, either tear down and rebuild something denser – or at least fix up their buildings.
Someone did exactly that on a house closer to downtown (on K Street). I watched that place, since it was for sale – a real wreck at the time. Now, it’s becoming quite attractive.
Regarding your “artificial constraint”, every development and every city in the world is “artificial”. Silicon Valley is artificial, and they’re literally creating “artificial” intelligence.
Yosemite National Park is “artificial”, as is the dam contained therein. It’s an artificial designation – something we “made up”.
Every bit of modern society is artificial (man-made), including money itself. Even farming is “artificial”.
Where you and I might agree is that demand shouldn’t be “artificially created” without considering the consequences.
Ron O
The constraint around Davis is only institutional which can be readily changed with a vote while SF’s is physical that can only be changed with significant energy and resource expenditure, if at all. You know what the difference is–quit acting obtuse.
As for birth rate, one of the prime reasons that it is dropping in the US is because housing has become too expensive so young families are unwilling to have children. By expanding the housing supply and reducing prices, the birth rate will rebound. This is an endogenous problem. (And that ignore the facts that the change in birth rate won’t affect the housing market for decades when that generation is old enough to buy houses, and that people move to where there are better jobs like in Davis which has 17,000 people commuting in from elsewhere.)
Richard: “Demand” itself is artificially created.
That’s why housing is expensive in San Francisco, Silicon Valley, etc.
200 years ago, you could probably buy the “entirety” of what is now San Francisco for $1,000 from the Spain (or subsequently, Mexico). And prior to that, there wasn’t even any way to buy it, since no one “owned” it.
Regarding the birth rate, does it not solve the so-called housing shortage if young people aren’t having kids at replacement levels? (Regardless of the cause?)
Regarding people commuting to Davis – it’s not happening. They’re commuting to UCD (and can do so very easily by buying a house for some $200K less in Woodland).
You’ve “complained” about workers commuting OUT of Davis, as well.
Can you make up your mind regarding what you think is a “problem”?
Here’s the link to the two LISC studies referenced in the article, one on comparative housing costs and the other on fiscal impacts.
https://londonmoeder.com/2025/05/13/the-opportunity-to-increase-family-housing-in-san-diego/
In any case, “fans” of infill should be advocating for Davis to become MORE expensive; not less expensive. (As David himself essentially acknowledged so that infill “pencils out”.)
🤦♂️
I thought that one might get your attention. But it’s kind of true, is it not?
Only if you wanted to defeat the purpose of adding housing
Maybe “cheap” housing is the worst for the environment?
And in the case of a place like Davis, people moving there are probably moving from a place where they currently have less impact. Perhaps steps should be taken to keep them where they already are (e.g., rent control, if they’re renters). And if they’re already homeowners somewhere, they don’t generally have a “problem” in the first place.
You’re welcome. Glad I could solve the “problem”.
I probably should be running things around here (and beyond).