A newly approved 489-unit apartment complex near Los Angeles International Airport shows just how hard it is to get housing built in California's biggest cities.
Developer Cityview went through a three-year process to get the green light for the project at 6136 W. Manchester Ave. It survived an environmental appeal, required a legal settlement, and ultimately advanced only after qualifying for streamlined review under state law.
It’s now one of only six large apartment developments under construction in all of Los Angeles, the nation's second most populous city.
California’s biggest cities are planning fewer housing units than they did a decade ago, despite strict state mandates to ramp up production to increase affordability and keep residents from moving to cheaper areas.
In 2024, Los Angeles approved just 17,200 new residential units — barely 30% of its annual goal — while San Francisco permitted only 1,074, its lowest showing since the aftermath of the Great Recession. Both cities are falling far short of the pace needed to meet their state-mandated targets by 2031, with the state calling for the planning of 2.5 million new residences in that time.
Monthly costs for apartments and other rentals are getting driven up by high single-family home prices, with Los Angeles posting monthly rents of $2,330 that are 30% above the nation's average, according to CoStar. In San Francisco, rents are even steeper, averaging $3,280 per month and more than double the nation's average.
Despite the high costs that point to potential profits for developers, high construction costs, hard-to-obtain financing packages and local red tape have hindered the construction of residential units in recent years, industry professionals tell CoStar News.
“The dirt is expensive. The regulations make it more expensive. The time it takes you to get entitled and get through permits just dilutes your returns,” Deborah LaFranchi, CEO of housing financing company SDS Capital Group, told CoStar News. The company is focusing on funding affordable housing projects in LA with private capital to bypass traditional hurdles.
Officials recognize the struggle in ramping up housing development to meet statewide mandates, with leaders in both Los Angeles and San Francisco attempting to revamp laws, among other strategies, to make homebuilding easier. But critics argue that deeper culture change is needed within city departments to make real progress.
"We must urgently build more housing to make sure the next generation of San Franciscans can afford to raise their kids here," Mayor Daniel Lurie said at an event this year.
Systemic struggle
California officials, in response to climbing housing costs, implemented the state's most ambitious pipeline goals with the 2021 update of its Regional Needs Housing Allocation, calling for 2.5 million housing units by 2031, with more than 1 million of those reserved for people making below area median incomes.
As of 2024, most major cities are far behind. Los Angeles will need to more than triple its permitting pace to hit its required 57,000 units per year, according to a report from the city's planning department. San Francisco is further behind, reaching just 9% of its eight-year target by the end of 2024.
Los Angeles permitted roughly 1,000 fewer homes last year than in 2023 and more than 5,000 fewer than in 2022, city filings show. San Francisco's target is 94,300 units by 2030, but zoning and development pipelines cover just 58,100. That leaves a shortfall of more than 36,000 units that city officials say they can’t accommodate without zoning changes. A recent repeal of office space minimums in the SoMa neighborhood unlocked new residential construction sites, but further reforms have been slow to materialize.
Developers say cost remains the biggest barrier. Construction expenses in both cities rank among the highest in the country, and permitting timelines are still unpredictable, even under state streamlining laws like SB 423. In many cases, city departments default to slower discretionary review processes that delay approvals and raise risk, developers say.
In Los Angeles, the permitting pipeline remains dominated by traditional reviews that require city employee involvement, despite the availability of self-permitting and other streamlined options.
Some California cities like San Diego and Sacramento have seen some success in building residential units by embracing the rezoning of underutilized commercial sites for housing and accelerating approvals. Sacramento credited its streamlined entitlements for boosting housing production to over 3,000 units per year, while San Diego’s Complete Communities Now initiative requires departments to review qualifying projects within 30 days, helping the city permit more than 18,000 homes since 2023.
LA and San Francisco, meanwhile, have struggled to implement those strategies at scale. Developers say that even when pro-housing laws are on the books, politics often overrides them.
LA's delays
Multifamily housing projects in Los Angeles take an average of nearly four years to complete, with 1.5 of those years lost in the approval process, according to a 2023 study published by researchers at UCLA and Cal State Northridge for the Los Angeles Business Council, an advocacy group composed of 500 business and civic leaders.
Trimming approval timelines by 25% could have added 18,000 units between 2010 and 2022, according to the Los Angeles Business Council report. City leaders have since pushed to ease reviews for affordable and mixed-income developments, but the report warned that without broader reforms, Los Angeles will remain far off pace.
One of the few large residential projects entitled by the city of Los Angeles in 2024 involves plans to demolish the Rancho San Pedro Public Housing project's 478 units and construct 512 market-rate units and 1,041 affordable units near the Port of Los Angeles. The project has been underway since 2018.
California developers say high construction costs and lengthy timelines make only high-end housing profitable. Market-rate housing far outpaced affordable production in 2024, according to Los Angeles officials. Of the 17,200 permitted units, more than 13,600 were for above-moderate income households, while lower-income categories were left behind. Affordable developers say city processes are still too slow, even when funding is secured.
“We’re trying to move quickly with private capital, but the approval timeline kills momentum,” said Andre Bueno, director of housing for Better Angels, a nonprofit that's pursuing unsubsidized affordable housing projects in LA.
Los Angeles Mayor Karen Bass has promised reforms. In her April State of the City speech, she pledged to overhaul housing approvals with tools like self-certification, artificial intelligence reviews, citywide fee waivers and a new program to more quickly permit 100% affordable housing projects in some areas. The mayor's office did not respond to requests to comment from CoStar News.
Those efforts may not be enough, some critics note.
“Our approvals process … is the result of early-20th-century thinking … supplemented by a political culture that favored preservation over growth,” said LA housing development veteran and Civic Enterprise Principal Mott Smith. “In Los Angeles, the bureaucracy is driven by fear of getting in trouble for saying yes.”
The so-called mansion tax in Los Angeles also plays a role in depressing housing development, according to real estate professionals. Multifamily development in Los Angeles dropped 18% in the year after Measure ULA took effect, amounting to 2,000 fewer homes annually.
San Francisco projects
In San Francisco’s Fillmore District, the $2.3 billion Freedom West redevelopment illustrates the steep climb facing even high-profile projects in the city. Despite community support and new funding from family foundation Crankstart Foundation, the plan to replace an aging co-op with nearly 2,000 homes and new commercial space has been delayed for years due to financing gaps and slow approvals — challenges that persist even with state streamlining laws in place.
The project is among several major proposals that have stalled despite what officials say is San Francisco’s urgent need for housing. City officials did not respond to CoStar News request to comment.
Officials, however, have taken aggressive steps to fix the problem. The city has cut taxes and fees for office-to-residential conversions, launched zoning changes to boost density and embraced new state streamlining laws. SB 423, authored by Sen. Scott Wiener, now allows many projects to avoid California Environmental Quality Act litigation and discretionary hearings altogether.
“No discretionary hearings, no CEQA lawsuits, none of the politics at the Board of Supervisors — you just get your damn permit,” Wiener said in 2024.
Unlike other cities, San Francisco is subject to annual housing reviews under SB 423. That’s raised pressure on city leaders, including newly elected Mayor Daniel Lurie, who campaigned on a promise to promote housing growth and cooperation at City Hall.
Still, developers say costs remain the biggest challenge. Rising rents are helping project feasibility, but high land prices and labor expenses make it hard to build affordably without subsidy.
San Francisco’s twin-tower 88 Bluxome project is moving forward with plans for 1,500 homes after a new zoning law scrapped outdated office space requirements in SoMa. The proposal is one of the largest in years and shows how policy changes are beginning to unlock stalled housing development.
San Francisco has approved more units than any other Bay Area city in the current housing cycle — about 7,300 so far — but it has a much higher target. Whether it can hit that goal in time remains an open question. One developer, Marc Babsin of the Emerald Fund, told CoStar News that success will require “pulling a lot of levers at once.”