Local and state policies have driven up the price of building multifamily housing in California to more than twice what it costs in Texas, according to the research organization RAND.
“The cost of building multifamily housing is 2.3 times higher in California than Texas and 1.5 times higher than in Colorado, the states examined by researchers,” RAND said in a press release.
That number varies across the Golden State; Los Angeles is 2.5 times as expensive to build in as Texas is, though that figure is twice as expensive and three times as expensive in San Diego and San Francisco, respectively.
While RAND acknowledges the role played by “regional factors such as higher land costs, more-expensive labor, and seismic safety standards” in driving up building apartments in California, researchers say “most of the higher costs can be attributed to factors such as the lengthy approval timelines and prescriptive building requirements that are policy decisions.”
“California is significantly more expensive than both Colorado and Texas in every cost category that we examined,” said Jason Ward, lead author of the report and an economist at RAND, said in the release. “One way to address California’s high housing costs is to look for lessons from states where it is easier and less expensive to build new housing.”
So what can California do? RAND suggests officials take some tips from Texas and other states where it’s cheaper and easier to build apartments. For example:
- California governments can adopt rules like those in Texas, where housing developments must be approved or denied within 30 days “or else it is presumed to be approved.”
- Synchronize construction inspections to “reduce the seven-month average gap in construction time between California and Texas.”
- Reduce governmental fees.
Perhaps the boldest suggestion, however, involves looking at housing proposals with a new perspective.
“Environmental gains from new housing subjected to California’s strict energy efficiency requirements should be weighed against the negative effects of lower levels of new housing construction due to these costly requirements, since new housing built to less demanding environmental standards would still create average efficiency gains compared to California’s aging housing stock,” RAND said.