Los Angeles is approving apartments at one of its slowest clips in decades, raising alarms among investors and policymakers that the region is falling further behind in meeting its state-mandated housing goals.
A new report from the University of Southern California finds Los Angeles County has completed fewer than 100,000 housing units since 2021, almost all at market rate. The county is required to plan for roughly 700,000 additional residential units by 2029, including nearly 300,000 affordable units, highlighting the widening affordability gap.
Multifamily developments, long the engine of the region’s housing growth, take an average of three years to complete in Los Angeles, according to the study. That is roughly triple the national average and a key obstacle to bringing new supply online fast enough to ease rent pressures.
“Without major changes in how quickly multifamily projects can be approved and built, Los Angeles will continue to fall short,” said Elly Schoen, associate director of USC’s Neighborhood Data for Social Change project, during a press event.
The number of apartment units under construction across Los Angeles has dropped 21% in the past year, CoStar data shows. Vacancy remains among the lowest in the country, while average rents have ticked up 0.7% in the past year to $2,336 per unit, 32% above the nation's average.
For developers, lenders and brokers, the findings underscore a mounting tension as project delays threaten not only to deepen the housing shortage but also to expose local governments to penalties and litigation if targets are missed.
Lagging production
The report, the inaugural State of Los Angeles County Housing and Neighborhoods survey, highlights that accessory dwelling units, or ADUs, account for more than a third of recent completions. Those units — rentals built by individual homeowners on their property, typically in the backyard or garage — are most often market rate or occupied by family members, raising doubts about their role in alleviating the affordability crunch.
“There’s nothing wrong with Grandma living in the ADU, but should that count towards the housing supply in the same way that a regular five-unit building does?” Schoen said during a press event.
When ADUs are stripped out, Los Angeles is approaching historic lows in traditional housing production. That leaves commercial developers under heightened pressure to find ways to deliver large-scale projects despite entitlement and construction delays.
Affordable housing in particular is far behind schedule. Just 4,400 income-restricted units were completed in 2024, the report found. While that marks a high-water mark for the decade, it represents only a fraction of the more than 300,000 units needed by 2029.
About 700,000 renter households make less than $50,000 per year in LA County and "they are really, really struggling with the cost of housing," Schoen said, adding that 90% of these households spend more than one-third of their income on rent.
The study points to multiple headwinds slowing development. Long permitting timelines, high construction costs and uncertainty around zoning reforms have left developers reluctant to move forward on speculative projects, according to the report.
“It takes three years to construct and get all the utilities and inspections done," Schoen said. "That is a really big roadblock to getting more affordable housing on the map.”
Those factors have combined with the city's so-called mansion tax, higher interest rates and rising insurance costs to create one of the most challenging multifamily development environments in the country, according to brokers and developers.
Public policies and incentives have helped fund much of the new affordable housing stock in the region, but it will take private investors, nonprofits and developers working together to meet the goals, according to Corey Matthews, vice president of global philanthropy at JPMorgan Chase. The group plans to use the USC study to inform investment decisions.
“If anybody has access to land or can quickly get it, they need to be in the business of developing it. It is that urgent for us to have housing here in Los Angeles," Matthews said at the press conference.