Association for Public Policy Analysis & Management

As California’s gap between incomes and housing costs continues to widen, state and local policymakers are grappling with ways to improve affordability. One approach is to encourage development of smaller, less costly housing types, especially apartments in multifamily buildings. In well-functioning housing markets, developers will choose to build apartments in locations where land is expensive and housing demand is strong. However, single-family homeowners often seek to limit apartments through restrictive zoning. In this paper, we use a newly collected dataset of land use regulations to analyze how California’s local governments regulate new apartment development, and whether zoning is limiting multifamily construction. Results indicate that California cities use multiple channels to restrict apartments. Jurisdictions that set lower allowed densities and building heights issued fewer multifamily permits from 2013 to 2017, conditional on housing market factors. Results also show that the amount of multifamily development is not strongly correlated with rents, contrary to economic fundamentals.