Los Angeles Apartment Shortage: Construction Decline & Rising Rents

## Can’t Find an Apartment in L.A.? That’s Because Fewer Are Being Built Los Angeles is facing a severe housing shortage, and the root cause isn’t simply high demand – it’s a dramatic decline in apartment construction. While renters across the city struggle to find available units, the supply of new apartments is dwindling at an alarming rate, creating a perfect storm of limited options and soaring prices. According to Rentcafe.com, Riverside County has experienced the third-largest year-over-year growth in apartment completions, boasting a remarkable 154.1% increase. This surge is largely due to major new construction projects in cities like Beaumont and Riverside. In contrast, Los Angeles’s building activity has stalled, primarily because the cost of developing apartments has become prohibitively high, and potential profits are unstable. Roger Vincent documented this trend last week, highlighting the critical shortage.

The core issue is a significant drop in the number of apartments under construction in Los Angeles. Data from CoStar reveals a concerning downward trend, with construction numbers falling each quarter since early last year and poised to reach a 10-year low. As of the three months through September, fewer than 19,000 apartments were under construction – a staggering 30% decrease compared to three years earlier. This decline is directly attributed to a lack of investment, with pension funds, insurance companies, and other long-term investors shying away from L.A. due to the unpredictable and rapidly changing regulatory environment. Developer Ari Kahan, who previously oversaw projects with up to 800 units, has ceased new acquisitions with development intentions for over two years, stating, "I don’t know when we will be building in L.A. next." Several factors contribute to this hesitation. Rising construction material costs, fueled by higher tariffs on iron, steel, and copper wire, are a major obstacle. Furthermore, the crackdown on undocumented workers – who comprise approximately 26% of the state’s construction workforce – has reduced labor availability and created uncertainty within the industry. Economist Anirban Basu notes that tariffs have driven up prices in these key materials, with iron prices rising 9% and copper prices jumping 14% over the past year.

Historically, housing production in Los Angeles County has slowed dramatically. From over 70,000 new units annually in the 1950s, construction plummeted to roughly 30,000 in the 1970s and 1980s, eventually falling to fewer than 15,000 in the 2010s. This long-term decline has resulted in an aging housing stock and a critical shortage of affordable options. A recent USC project analyzing housing data across Los Angeles County confirms this trend.

The financial implications for renters are significant. Current construction costs necessitate rental rates between $4,000 and $5,000 per month, depending on apartment size. According to Rentcafe, a renter would need a gross monthly income of approximately $13,400 to afford this level of rent. Developers anticipate a shift towards longer commutes as people are forced to seek housing further from the city center.