New multifamily development projects may freeze up around the country — especially in Los Angeles — but the nation’s second-largest metro market is still on track to deliver more than 14,000 apartment units this year in large buildings, according to a report from RentCafe and its data partner Yardi Matrix.
The report was published late last month and based its analysis on new Certificate of Occupancy filings from both affordable and market-rate projects with at least 50 units. RentCafe and Yardi analyzed data around the country; the 2023 estimate for Greater L.A. ranked the metro as seventh in the country, between Phoenix and Houston.
New York, which is on track to produce roughly 33,000 new units this year, ranked first, and Dallas, with about 23,700, was second.
“Apartment construction in the U.S. is experiencing its best years on record,” the report says. “The pandemic building boom brought 1.2 million apartments to the market in the last three years and 2023 is also shaping up as a new peak year for construction.”
Yet it’s noteworthy that this year’s deliveries reflect projects that mostly began years ago, when the national development climate was much more favorable — and this year that climate has taken a nosedive, which the report acknowledges.
“The supply growth is likely to go slower after the current round of projects is completed,” the authors write. The report predicts a national 15 percent year-over-year drop in completions for the next few years.
Greater L.A.’s 2023 estimate was up from the 2022 figure but down from 2021. It was also easily the highest in California. Yardi’s analysis found the San Francisco metro area, the second most productive, is on pace for about 7,300 units this year, and San Jose, which ranked third, is on pace for about 3,200.
Yardi found that the City of L.A. by itself — which accounts for about 40 percent of L.A. County’s population — is on pace for about 5,900 unit completions this year, roughly equal to last year’s total but down from 2021, when the city saw roughly 7,200.
It’s also important to note that Yardi’s L.A. figures represent an undercount, because they only include larger buildings.
But while the figures do show that some badly needed inventory is in fact coming on the market, they illustrate the extent of California’s and Greater L.A.’s housing crisis. Another report, published last summer, put California’s housing shortage at nearly a million units, easily the highest of any state. And it found nearly 400,000 of those units are needed in Greater L.A.
“California’s severe housing shortage is badly damaging our state, and we need many approaches to tackle it,” Sen. Scott Wiener, an influential San Francisco Democrat, said earlier this year.
For years now Wiener and other state and local politicians have, in fact, prioritized the issue, but particularly in the City of L.A. a combination of high costs, inaccessible capital and slow approvals has left plenty of multifamily developers hopeless.
“We love this city, and we want to do bigger projects here,” one developer, Artem Tepler, recently told TRD. “But at this point it’s just becoming harder and harder to do business here. It’s easier to get on a plane and do a build in Texas than it is to do it in our own backyard.”
The report’s figures also reflect that: From 2020 to 2022, Greater Dallas, Houston and Austin ranked as one, three and four, respectively, for most new apartment completions among all the country’s metro areas.