Friday, September 15, 2023 / by Fahad Karamat
While the Hollywood sign might have you dreaming of stars, Greater Los Angeles is now shining in another domain: apartment completions. However, even as the City of Angels ranks seventh nationwide in new large apartment unit completions, the state's overwhelming housing crisis casts a gloomy shadow.
Apartment Supply Wave in Greater LA
According to a recent RentCafe and Yardi Matrix report, LA is poised to roll out over 14,000 apartment units in substantial constructions this year. While this might sound like a lot, a deeper look reveals that LA trails behind cities like New York, which tops the list with an astounding 33,000 new units, and Dallas, making a splash with around 23,700.
A Pandemic-Inspired Construction High
If there's one upside to the pandemic, it's the surge it prompted in the construction sector. The report highlights that the US has witnessed the introduction of 1.2 million apartments in the previous three years. 2023 seems to continue this trend, dubbed a "peak year for construction."
An Uncertain Construction Forecast
However, for those reveling in this uptick, there's a cautionary note: the majority of 2023's completions spring from projects that took root years ago under a more developer-friendly climate. Predictions suggest a lull, anticipating a 15% annual drop in completions for the forthcoming years.
California's Housing Quandary
While LA might be a beacon of apartment completions in California, the wider scenario is less rosy. San Francisco and San Jose trail LA with 7,300 and 3,200 units, respectively. Though LA's figures sound promising, there's a catch. These numbers only encapsulate larger buildings, underrepresenting the actual count. But it's not just about numbers. Last summer's report diagnosed California with a near-million-unit housing deficit – with Greater LA needing close to 400,000.
A Plea for Solutions
Senator Scott Wiener's words encapsulate the urgency: "California's severe housing shortage is badly damaging our state." While politicians prioritize the issue, LA's combination of exorbitant costs, snail-paced approvals, and elusive capital has multifamily developers pondering other horizons. Developer Artem Tepler's sentiment is telling: "It's easier to get on a plane and do a build in Texas than it is to do it in our own backyard."
Greater Los Angeles might be seeing a momentary apartment construction flourish, but the underlying tones are evident. The city and state at large grapple with an escalating housing crisis, and if streamlined solutions are implemented, the City of Dreams might see more developers taking their dreams elsewhere.