For years, one word was all pretty much all Californians heard from political leaders about solving the state's housing problem: Density. Now it's time to ask how that's working out. Answer: not so well. Despite legislative efforts promoting density, building permits in California have decreased, indicating that density as a solution is not effective.
One reason density isn't working is that owners of commercial buildings, mainly real estate investment trusts, are hesitant to convert buildings into condominiums and apartments. The focus remains on high rents, leading to a worsening housing shortage in California.
California issued only 111,221 new permits last year, a 6% drop from 2022, with even reductions in permits for single-family homes. Major markets like San Francisco-Oakland-Berkeley and Los Angeles-Long Beach-Anaheim experienced significant permit reductions, illustrating the ineffectiveness of density-promoting laws.
Point2, a real estate research firm, analyzed data from 384 cities across the U.S. in 2023, revealing the failure of density in California. Medium and small metros like Oxnard-Ventura, the Stockton area, Napa-Sonoma, and Santa Maria-Santa Barbara all experienced permit losses, contributing to the statewide housing shortage.
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