A new RAND study finds that the cost of building multifamily housing in California is 2.3 times higher than in Texas and 1.5 times higher than in Colorado.
Our researchers analyzed more than 140 completed projects in the three states. They found that California was the most expensive for multifamily housing production in every cost category they considered.
What explains this difference? It’s largely driven by state and local policies that contribute to long permitting and construction timelines, as well as higher local development fees. The time to bring a project to completion in California is more than 22 months longer than the average time required in Texas. And municipal impact and development fees average $29,000 per unit in California, compared with less than $1,000 in Texas and $12,000 in Colorado.
The researchers also identified actions that could help lower production costs and increase housing affordability in California. For instance, California could adopt a policy similar to Texas state law that requires local jurisdictions to approve or deny a proposal for a housing development within 30 days. Other policies—synchronized rather than sequential inspections, for example—could also help lower costs by reducing construction timelines.
For decades, California has ranked second only to Hawaii in housing and rental costs, and the state has seven of the 10 most expensive metropolitan areas in the nation. Learning lessons from other states could help California address its long-standing housing crisis.
