Apparently, it's pretty hard to find an apartment in Los Angeles. In fact, if we apply one of Ronald Reagan's aphorisms - the same Ronald Reagan who was not only president but also a two-term Governor of California, back when that state was still sane - that is, if something moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. Well, the City of Angels multi-family housing market may be in that last stage, because there aren't many new apartments being built.
Why? Because the city of Los Angeles seems to be going out of its way to make it impossible, with taxes and excessive regulation.
Kerry Jackson, of the Pacific Research Institute, has some numbers on what LA needs, apartment-wise:
Los Angeles hasn’t been a builders’ paradise in decades. But in the somewhat recent past, there was some activity. Now, according to an October Los Angeles Times article, “Almost no one is building new apartments in Los Angeles.”
Citing numbers from real estate data provider CoStar, the Times reported that fewer than 19,000 apartment units were under construction in the third quarter of 2025. That’s a 30% crash from three years earlier.
It turns out that “institutional investors are pulling money from” Los Angeles real estate projects and moving their capital instead to “other cities with more predictable development rules and profits.”
The city’s own housing assessment found that between 2021 and 2029, Los Angeles would need to build 486,643 new units. At the current construction pace, that number is unreachable. The city approved 6,618 units in 2021, 6,537 in 2022, 5,732 in 2023 and roughly 4,000 last year. So only about another 463,000 to go.
I've commented before on liberal politicians bemoaning the lack of affordable housing in our major cities. This is indeed the case, especially in the really big cities where "affordable housing" usually means rented apartments. I've also commented before about Tokyo, and how, despite that being one of the largest cities in the world, it still manages to attract young people starting out in life. The housing market there is handled, basically, by vertical filing. Tokyo is replete with high-rise apartment buildings, and while some Japanese apartments are really claustrophobic by Western standards, they are there, and they are affordable.
New York and some eastern cities adopt this to one degree or another. Not so much in Los Angeles. There are a couple of problems that are killing developers in this space right now.
First, there's the tax angle:
For instance, there’s the United to House Los Angeles Tax, which Kahan calls a “self-inflicted wound.” Also known as the “mansion tax,” Measure ULA assesses a 4% duty on homes or commercial properties valued at more than $5.3 million, and 5.5% on those valued at more than $10.6 million. It has been in effect since April 2023, having been approved by voters the previous fall. The construction downturn arriving at roughly the same time the tax was imposed cannot be brushed aside as a coincidence.
It’s “one of the steepest such levies in the nation,” says research organization RAND, so of course avoidance is inevitable, and “the easiest way” to do that “is to not sell.”
Here's another pithy political aphorism: What you tax, you get less of. Not just in housing, but in any economic activity. This punitive tax is causing people who own properties to keep them, on the margins, some of those may have been developed into multi-family housing. In other words, apartments. It's not clear how much activity this is stifling, as there are other issues with ripping down a mansion and putting up a high-rise, but there has to be some effect.
Read More: Was LA Mayor Karen Bass Just Caught in a Lie About Pacific Palisades Fire Rebuild?
And, of course, there's the slothlike pace of the permitting process:
Sluggish permitting and approval has long been a hallmark of homebuilding in Los Angeles. Thirty years ago the Los Angeles Times reported the results of a study from the group Progress LA that found the city took “up to 16 times as long as other cities in the region to process building permits and charges up to 22 times more in fees more in fees to do so.”
It found Los Angeles to be “by far” more “costly, time-consuming and hostile to its customers” than Anaheim, Burbank, Long Beach, Las Vegas and Phoenix, cities that were competing with Los Angeles to attract employers.
Steve Soboroff, then president of the city’s Recreation and Parks Commission and co-chairman of the coalition that ordered the study, called the findings “a stinging statistical and analytical indictment of a bureaucracy that quite literally chases jobs and tax revenue beyond the city limits.”
Look at what's happening in the Pacific Palisades fire zone right now.
California, in general, and Los Angeles, in particular, seem determined to drive every productive resident away. Oh, the very rich can afford to live in the City of Angels; they can afford socialist policies, being sheltered somewhat by their wealth, and if the crocodile looks to be about to turn on them, they can always leave. But young people starting out? The vanishing middle class? Socialist, "progressive" regimes are always harshest on those groups.
This is a problem that the local and state governments could solve. It's easy to say they should work with developers, but in fact, it's easier even than that. The best thing that the city of Los Angeles and the state of California could do to boost this market, this development of actual affordable housing, would be just to get the heck out of the way.
