California’s Density Deficit and the Likely Impact of SB 827

California’s Density Deficit and the Likely Impact of SB 827

Among the 15 American metropolitan areas with the fastest growth in demand for housing since 2012, 5 are in California. Those 5 California metros grew more slowly than all 10 other metros on the list.
A dearth of new homes and expanding housing demand cause high inflation in the housing market. Even though Denver, Austin, and Seattle had higher demand growth than any California metro, rent in those cities grew less rapidly. Had California implemented measures to accommodate growing demand as the rest of the country does, its residents would now be paying less in rent. This article considers a counterfactual thought experiment: how would California’s housing market be different today if a policy currently under consideration in the California Senate—SB 827, which would allow new residential building along public transit corridors—had been implemented six years ago? I estimate that rent would be 5.8 percent lower in San Francisco, a savings of $266 per month on the median home, and 4.2 percent lower in Los Angeles County, savings of $124 per month.

Salim B. Furth

Mercatus Center

April 2018

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By |2018-01-01T00:00:00-08:00January 1st, 2018|Affordability, Land Use Regulation, Reference, Reforms|