The LA housing policies making developers turn away from the city

Los Angeles has seemingly “infinite demand” for housing, but housing development has slowed to a crawl, Jack Flemming writes for the LA Times. The housing developers the LA Times spoke with said skyrocketing interest rates and ripple effects from pandemic-era policies complicate efforts to build new developments in L.A. 

During the pandemic, “the city and the county instituted tenant protections such as rent freezes and eviction moratoriums for years, a vital aid for renters during an uncertain time. But developers claim the moves flattened revenues by keeping rents lower than what the market demanded and also creating a backlog of eviction cases. Even though the protections have expired, their ripple effects continue today, at the same time that expenses, such as construction costs, have shot up,” The LA Times reports.

Developer Yoni Chriqui also said L.A.’s “mansion tax,” which puts a 4% or 5.5% tax on L.A. property sales over $5.4 million, had led many developers to build smaller projects to avoid the extra tax, rather than the dense developments LA needs. The LA Times reports:

“People are building two or three stories on parcels that could hold six or seven stories,” Chriqui said.