Los Angeles could unlock a major source of new housing by allowing older single-family properties to be converted into smaller multi-unit developments, according to new research from the American Enterprise Institute’s Housing Center.
The analysis comes as Los Angeles officials debate how to respond to Senate Bill 79, a state law intended to allow taller apartment buildings near transit hubs. Last month, the Los Angeles City Planning Commission considered a proposal that would delay implementation of SB 79 until 2030 and instead advance a local “Low-Rise Ordinance.”
Supporters of more aggressive housing reforms say that approach misses a larger opportunity: allowing so-called starter homes in single-family neighborhoods. Under the AEI proposal, aging single-family houses could be replaced with townhomes, fourplexes or projects with as many as eight homes on one lot.
The institute estimates that such a policy could add about 13,600 homes per year in Los Angeles, nearly doubling the city’s current pace of new housing construction. Over a decade, that would amount to roughly 136,000 additional homes, while generating an estimated $9 billion in property tax revenue.
The research argues that Los Angeles already sees older single-family homes replaced in many neighborhoods, but often with large luxury houses that do not increase the number of units. A typical example cited by AEI involves a $1.1 million single-family home being demolished and replaced by a $3.1 million mansion.
By contrast, the institute says, replacing that same property with four smaller homes could produce units valued at about $1.2 million each. While the individual homes would cost less than a new mansion, the total property value would rise, increasing tax revenue for the city and other public services.
AEI estimates the revenue from such conversions could reach $182 million in the first year, $9 billion over 10 years and $36 billion over 20 years as more lots are redeveloped. Those funds would support the city’s general fund, schools and essential services.
The report points to several reasons Los Angeles is especially well suited for this type of housing reform. Much of the city’s single-family housing stock is old, with the typical home built before 1960. Land values are also high, with the median home valued at roughly $1.1 million, much of that tied to the land rather than the structure itself.
In all, nearly 400,000 single-family homes sit on valuable land across Los Angeles, according to the analysis.
The debate over SB 79 has focused largely on housing near rail stations and major transit corridors. The state law is designed to make it easier to build mid-rise and high-rise housing in those areas. One estimate cited by AEI suggests a streamlined version of transit-oriented development could produce about 4,200 homes per year.
But the institute argues that starter homes represent a broader opportunity because they could be built throughout existing single-family neighborhoods, not only near transit. It also says Los Angeles’ local low-rise proposal could fall short in both directions: allowing more density than needed in some areas while not permitting enough housing near transit to make a significant difference.
Los Angeles has a long history with this type of housing. Between 1921 and 1930, the city permitted about 220,000 homes, roughly half of them duplexes, triplexes, fourplexes or bungalow courts. About two-thirds of those structures still stand today. The report says those housing types became far less common after federal policy, state law and local zoning changes beginning in the 1930s restricted or prohibited them.
Housing advocates have pointed to California’s accessory dwelling unit reforms as a possible model. Since the state streamlined approvals, reduced fees and required cities to allow many ADUs by right, backyard cottages and garage conversions have become a significant source of new housing in Los Angeles. Nearly one-quarter of new homes built in the city in recent years have been ADUs, according to the article.
Los Angeles faces an estimated shortage of nearly 500,000 homes. While city officials continue to push back against state mandates for more housing near transit, the AEI analysis argues that legalizing small multi-unit projects on single-family lots could provide one of the largest housing opportunities available to the city.
Original source: CalMatters
