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Can LA build its way out of its housing crisis?

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It may not be easy

Bringing down the cost of housing in California could require construction of millions of new homes.
Liz Kuball

Researchers and elected officials generally agree that a statewide shortage of housing is making homes and apartments less affordable to Los Angeles residents.

But will simply building more housing solve that problem?

The answer is complicated, says economist Jerry Nickelsburg, director of the UCLA Anderson Forecast.

In an analysis of housing affordability in California published this week, Nickelsburg argues that policy makers need to think about more than supply and demand when thinking about housing prices in Los Angeles and other pricey cities.

For one thing, LA may be appealing enough as a place to live that a small drop in home prices could simply encourage more people to relocate to the city from other areas, increasing demand and driving housing costs back up.

“It’s not that building more won’t bring down prices,” Nickelsburg tells Curbed. “It’s that you’re building for Ohioans and East Coasters and everyone else who wants to move here.”

He points out that most of California ranks highly on the U.S. Department of Agriculture’s Natural Amenities Scale, which measures positive environmental features of an area like warm weather and mountains. That makes the state a desirable place to live regardless of housing prices; it can also present obstacles to new development.

“Los Angeles can’t just keep growing outward,” Nickelsburg says. “You have mountains and the ocean in the way.”

Given those constraints, many housing advocates have stressed the need for increased density in urban areas—particularly those near transit. Gubernatorial candidate Gavin Newsom last year laid out a plan to dramatically increase California’s level of housing production.

“Each new unit built and each individual with a place to call their own is one more person who can feel at home in California,” wrote Newsom at the time.

Nickelsburg doesn’t necessarily disagree, but stresses that getting to a point where housing is truly affordable for most residents will be tricky.

“What you have to think about if your solution is ‘build baby build’ is how much housing do you actually have to build to get there?” he says,

Nickelsburg estimates that across the state, more than 3 million new houses and apartments would need to be constructed. With that housing would come increased demand for businesses, infrastructure, and community resources. Those needs, along with likely population growth could create further challenge for local leaders.

“It’s not just about having a house,” he says. “You have to be able to get to the grocery store. You have to be able to get to work.”

He argues that programs directly subsidizing housing for specific professionals like teachers and first responders could provide more targeted solutions while officials consider longer term plans.

Above all, Nickelsburg says local leaders need to be clearer about their goals when talking about housing affordability, and to be realistic about what‘s possible.

“There are many solutions,” he says, “but we have to think of the end game—what do we want California to look like?”