Downtown LA may be filled with impressive skyscrapers, but high-rise multifamily properties make up only small portion of the city’s housing stock.
According to urban planning resource, Urban Footprint, about 75% of the land in LA are zoned for single-family use. This is in contrast to New York, where only 15% is similarly zoned. Anyone who visits both metros can see the stark difference – while almost all of New York is made up of apartment and commercial buildings, Los Angeles boasts spacious residential areas with grassy yards and tree-lined streets.
All this is about to change, however, with two important laws that affect Los Angeles in particular and California in general – Assembly Bill 68 and Senate Bill 50. Assembly Bill 68 has already been enacted, while SB 50 is still being debated upon.
History of LA’s zoning areas
Los Angeles implemented its first zoning code in 1920, dividing the city into five land uses. Under that regulation, there were fewer restrictions that limited housing types to single-family use. However, zoning rules became more restrictive in the succeeding decades.
The passing of the National Housing Act in 1934 reinforced the preference for single-family homes in LA. The Federal Housing Authority, which promoted the granting of long term loans for homes, minimized lenders’ risks by discouraging loans outside of “safe investment areas”, or neighborhoods with mostly single-family homes and less mixed housing types. There were also special classifications for duplexes and suburban zones.
By 1970, around 50% of the city was zoned for single-family homes only. Zoning was further restricted in the decade to limit the number of homes in the area and slow down development.
All these restrictions to favor single-family units are now believed to have led to the city’s current housing problems. As LA’s population continued to rise, available homes got scarcer, resulting in astronomic price increases that have made home buying out of reach for many.
As of 2010, the city was zoned to host 4.3 million residents, but the population has also grown to around 4 million. This leaves very little room to accommodate further growth and had made competition for homes incredibly tight.
What the new zoning regulations can do
Assembly Bill 68 gives homeowners the right to build two new housing units on lots previously restricted to single-family use only. This was an expansion of an earlier state law that allowed the construction of one accessory dwelling unit, also known as a granny flat, in-law suite, and garage conversion. AB 68 also removes cities’ power to impose rules on parking conditions, as well as requirements on size and setback.
If passed, SB 50 will allow more sweeping changes. It will force and encourage California cities to plan the construction of Transit Oriented Communities, or residential areas around bus and train stations with housing options for lower income residents.
In effect, the bill will also prevent cities from limiting land use to single-family homes. While developers may still build these homes, they also have the option to construct multifamily properties instead. Near transit lines, four to five story apartment buildings may be built, while in areas previously zoned for single-family homes only, up to four housing units may be built.
If you’re an investor and want to more about the opportunities brought by the new zoning regulations in Los Angeles, give us a call. Get in touch with me, Sasha Rahban, at 310.963.9680 or send me a message.