Affordable Housing Booming in Los Angeles Area

Developers in Los Angeles have been some of the most active in erecting affordable housing across the country in the post-pandemic years.

Los Angeles ranked seventh nationwide for affordable housing between 2020 and 2024, Westside Today reported, citing a new report from RentCafe. A total of 9,406 income-restricted apartments were completed in Los Angeles in the post-Covid period, accounting for approximately 20.5 percent of all apartment construction in the L.A. metro area in those years.

Of the country’s 20 largest affordable housing markets, Los Angeles has one of the highest proportions of income-restricted units to overall new construction, according to RentCafe’s analysis. About one-third of new apartment development in New York City and San Francisco was for affordable units; by contrast, about 5 percent of new construction in Dallas consists of income-restricted housing. Seattle claimed the top spot with 14,290 new affordable units constructed between 2020 and 2024.

Affordable housing development has been rapidly picking up speed in recent years, per the RentCafe report. Between 2020 and 2024, the number of affordable units completed represented a 79.5 percent increase compared to the previous five-year period between 2015 and 2019.

Executive Directive 1, enacted by Mayor Karen Bass in late 2022, has helped kick affordable housing development into high gear. The directive expedites approvals for 100 percent affordable projects as developers who apply to build fully affordable developments can skip the lengthy public hearings process and avoid city council votes, cutting down approval timelines from nine months to a few weeks in most cases, according to the mayor’s office.

Developers have taken note as they increasingly opt to build affordable housing instead of market rate.

“Market-rate housing [construction] has been essentially canceled at this point,” Chris Aiello, founding partner at Six Peak Capital, which has been among the firms increasingly pursuing affordable housing, told CoStar. “Virtually no land makes sense from an investment perspective to build market rate.”

“ED1 is the only reason we came out here,” Passo principal Daniel Glimcher told the Wall Street Journal. “Market-rate multifamily just really doesn’t pencil out in L.A.”

Since ED1’s implementation, developers have submitted proposals for 35,000 units under ED1 and secured approvals for approximately 29,000 of those units as of last August. That far outdoes the number of affordable housing submissions from 2020 to 2022 as well as the 17,556 units total housing units approved in L.A. during the last fiscal year.

The state of California is getting behind the effort to build more income-restricted housing. Last month, the California Strategic Growth Council approved $866 million in grant funding for affordable housing projects across the state, including more than $182 million for efforts in the Los Angeles area.

— Chris Malone Méndez