Why is it so expensive to build homes at affordable prices in California?

By Jason Ward, special to Calmatters

This comment was originally published by CalmattersS Register about their ballots.

The spiral price of homes in California has affected almost every aspect of life.

California has the largest homeless population in the country and among the highest percentages of Hiring and Overpopulated homesS

One of the reasons for the seemingly endless ascending trajectory of rents is How expensive it is to build New apartments in California. These costs are a major contribution to “Rents on a hassle -freeOr what must be charged in order to be a project to be financially feasible.

I recently run a A study that compares the overall development of the apartment Costs in California for those in Colorado and Texas. The average apartment in Texas costs approximately $ 150,000 for production; In California, building the same apartment costs about $ 430,000, or 2.8 times more. Colorado occupies an average position with an average price of about $ 240,000 per unit.

For publicly subsidized, affordable apartments – a sector for which California has spent billions in recent years – the difference is even worse. They cost more than four times more than apartment units at affordable prices in Colorado and Texas.

There is no single factor that leads to these huge differences. The cost of land in California is more than three times the average for Texas. The “solid costs” or those related to the improvement of the land and the construction of buildings are 2.2 times larger than those in Texas. The soft costs in California, which include funding, architectural and engineering fees and development fees accrued by local authorities, are 3.8 times more than the average for Texas.

There are some inevitable California -specific costs, and ensuring that buildings are resistant to earthquake shaking. But really rescue seismic requirements explain only about 6% of differences with difficult costs, the study estimated. The state requirements for the energy efficiency of the state add about 7%.

High costs of living in California may increase the cost of labor, but we have found that differences in construction salaries explain only 6% to 10% of the differences in solid costs for market frequency apartments. However, for public subsidized apartment projects that are often authorized to pay salaries at the Union level, labor costs explain up to 20% to 35% of the total difference in California and Texas costs.

The soft costs in California are the main culprit. California real estate developers pay remarkably high fees for architectural and engineering services – tripling the average price in Texas. This is five times more or more if you are building publicly funded, affordable apartments in the Los Angeles metro regions and San Francisco.

Seismic engineering requirements play a role. The bigger factor is complex and stressful design requirements for homes at affordable prices. They are dictated by state and local sources of funding and do not have much in common with habitability or safety, but contribute significantly to these amazing differences.

Local authorities development make the biggest difference with soft costs in California. Similar fees that were subject to a 2024 US Supreme Court CaseOn average, about $ 30,000 per unit. In Texas, the average is about $ 800. (Colorado again occupies an average of about $ 12,000.)

In San Diego, for example, these fees average eat 14% of the total cost of development of an apartment.

But the biggest thing that leads to the cost of apartments in California? Time.

A privately funded residential building, which takes just over two years from the beginning to the end in Texas, will take four years in California. It takes twice as long as the project approved and the construction graph is 1.5 times longer.

This means that the cost of land should be incurred in a long time, the equipment and labor are in jobs longer and that the loans are taken for a longer term, etc.

Most of the differences that the study reveals are stemmed from the choice of policy made by state and local authorities. Many of them are inheritance of the so -called “Slowness“In California, which has formed housing production since the 1980s.

These efforts worked. The population growth in the state has been negative for several years after 2020, long to the high cost of housing. More recently, the growth of California was half the number observed in Texas and Florida, with younger and higher disproportionate departure.

These departments are terrible to the fiscal future of the state and political influence on a national scale. California recently Lose space in the congress For the first time in his history. If the current national trends in the population remain, it may lose four or five places in 2030.

California legislature has become increasingly focused With a reduction in living costs, but achieving this goal requires significant progress in reducing housing costs. New suggestions for Liberated urban filling of residential production by the state legislation on the environment And a package of permits reforms are steps in this direction.

Will politicians also take lessons from the cheaper methods of homes in Texas and Colorado? That remains to be seen. But the future of California may depend on it.

This article was Originally Published on CalMatters and was reissued under Creative Commons Attribution-Noncommercial-Noderivatives License.