Report: To become affordable, LA needs to build duplexes—not just tall towers

Los Angeles’s affordable housing future won’t be found in a skyline crowded with tall towers, but in duplexes, bungalow courts, and accessory dwelling units, according to a new report.

“There is space available inside Los Angeles to add 1 million units within the next decade—without having to turn every corner into a high-rise,” says Steven Kling, who co-led a new report from economic researchers at the McKinsey Global Institute on affordable housing in LA.

The report describes a “path forward” to a more affordable Los Angeles that includes adding more apartment complexes near transit stops, building more micro units and bungalow courts, adding more ADUs to single-family homes, and converting single-family homes on multifamily-zoned parcels to duplexes and triplexes.

These types of units cost significantly less to build so owners wouldn’t have to charge as much to rent them out. But to truly make them a viable option, the city would need to approve plans quicker and relax open space and parking requirements.

The city also needs to ease up on its time-consuming permitting process, clean up its confusing and complex zoning codes, and expand incentive and subsidy programs for developers, the report concludes.

The main reason why developers build tall, expensive apartments is because it doesn’t pencil out otherwise—unless they can obtain public subsidies or tap incentive programs, such as LA’s largely successful transit-oriented communities program.

For-profit developers need to charge about $3,000 for a standard, 970-square-foot unit to achieve “sufficient returns,” according to the report, but a $3,000-unit is affordable only to households who make make 175 percent or more of the area’s median income.

The report underscores how wide the gap has grown between how much people earn and how much they pay for rent in the city of Los Angeles. Nearly 1 million households, or 70 percent of all households, can’t afford market-rate housing in their neighborhoods, it finds.

While Los Angeles is building more housing than any other city in California—and more per 2013 to ’17 population growth than New York, Seattle, Phoenix, and Dallas—only about 9 percent of the units added over the past five years have been affordable to households earning less than the area’s household median income, which was $69,300 in 2018.

That’s 7,300 affordable units in a city with a population of 4 million.

“We actually haven’t green-lit that much compared to demand, and the lack of building has been a contributing factor to the quantity of people experiencing homelessness,” says Gary Painter, director of USC’s Homelessness Policy Research Institute. “We haven’t built anywhere close to what we need for middle-income earners.”

Via McKinsey Global Institute

It doesn’t have to be this way.

A duplex, triplex, or fourplex converted from a single-family home could draw a return even with a rent as low as $1,500 month; a bungalow court on parcel zoned for single-family homes could support rents from $1,000. And they could be built more quickly.

Mark Vallianatos, former policy director at Abundant Housing, has argued for years now that the city needs to do more to encourage production of these types of small, multifamily buildings, as it did during LA’s 1920s building boom.

“We tend to think of 20th century Los Angeles as being a city of single-family detached homes, with apartments and renters becoming a majority relatively recently,” he wrote in Urbanize LA in 2017. “But the 1920s housing boom was almost evenly split between one-unit homes and multi-unit buildings.”

Ultimately, parking and yard requirements dealt “a one-two punch” to bungalow courts and small multifamily buildings, Vallianatos wrote.

The city and county will need to rely heavily on the private sector to build enough affordable homes. The report estimates that it would cost more than $130 billion to publicly finance the 475,694 affordable units local jurisdictions aim to build countywide from 2021 to 2029.

If history is any example, it will be impossible to build that many units unless changes are made.

The county would to ramp up its affordable housing production to more than 20 times what it is now to meet that goal, the report says: “At the current pace, it would take LA County more than 35 years to hit an overall housing production goal it is meant to achieve in an eight-year period.”