The Multi-Family Development Debate in Los Angeles
Los Angeles has faced housing challenges for nearly five decades now. At its core, LA’s ongoing housing crisis is a supply and demand problem. There aren’t enough residential units to accommodate the millions of households who want to live in LA.
The lack of housing inventory forces households to spend a high percentage of their income on ever-rising housing costs. It also pushes some Angelinos out, causing families to relocate to less expensive areas. And it continues to contribute to the increasing homelessness crisis in our city.
The solution is obvious: Build more units! But this quickly begs the question: Where?
Most of LA (around 72% of the land area) is zoned for single-family homes rather than multi-family structures. But single-family homes take up more space, are most costly to build, and take longer to construct. Multi-family housing is objectively more efficient and more affordable. But with only 28% of the city open to multi-family development, can we ever create enough new housing to meet the demand?
Therein lies the Great Multi-Family Development Debate in Los Angeles. Should we continue to limit multi-family development to areas like Downtown LA and Koreatown, which are already densely populated? Or should we change zoning laws to expand multi-family development in traditionally single-family neighborhoods?
The Case for Preserving Single-Family Neighborhoods
Those who feel we should keep multi-family out of single-family neighborhoods focus largely on preserving the character of these neighborhoods.
Despite their central locations, neighborhoods like Hancock Park, Silver Lake, and West Adams have distinctive charm with tree-lined streets, single-family homes with yards, and less traffic than the main corridors. Some argue that upzoning to include multi-family could change the aesthetic and vibes in these unique areas.
Many homeowners in these single-family areas are also hesitant to accept multi-family buildings due to possible property value declines. After all, adding more units could devalue the existing inventory. This is partly the point: we need housing to become more attainable in LA. However, many homeowners aren’t willing to accept lower property values in exchange for making housing more affordable, even if they agree with affordable housing in the abstract.
Finally, there’s the legal and political complexity of altering zoning. Changing zoning laws requires navigating public hearings, opposing political agendas, and potential lawsuits.
The Case for Adding Multi-Family Housing to Single-Family Neighborhoods
Those in favor of allowing multi-family developments into single-family neighborhoods largely focus on creating affordable, equitable, and inclusive housing strategies.
Proponents point out that the gap between supply and demand cannot be closed by building only in already-dense neighborhoods like Downtown and Koreatown. There simply isn’t enough land or infrastructure to accommodate the volume of new homes required.
Furthermore, many analysts have noted that concentrating all new development in a few neighborhoods exacerbates inequality. It pushes lower-income residents into overburdened communities while wealthier, single-family enclaves remain untouched. Distributing multi-family housing more evenly across the city ensures that all neighborhoods share in solving our community’s housing crisis.
Finally, there’s the increased sustainability created when density increases. Higher-density multi-family housing makes walking, cycling, and public transportation more viable, reducing car dependence, which lowers greenhouse gas emissions. At a time when sprawling single-family zoning has pushed residential development into wildfire-prone and car-reliant areas, incorporating multi-family housing into existing single-family neighborhoods could prevent additional sprawl.
Where Do We Stand Today?
California state law requires cities to create a plan for addressing housing needs every eight years. Los Angeles' 2021-2029 plan set a goal of creating 456,643 new housing units during this period, with approximately 40% designated as affordable for low-income households. As of December 2024 (a third of the way into the cycle), the city had completed only about 15% of the required units, indicating a significant shortfall in meeting its housing targets.
California Senate Bills 684 and 1123 (SB 684 and SB 1123) have been implemented to streamline the city approval process for multi-family development, including allowing for multi-family buildings of up to 10 units on qualified single-family lots. But the LA City Council has voted to keep multi-family structures mostly out of single-family neighborhoods.
Where Do We Go from Here?
There are compromises to be had. Rather than looking at this issue as either keeping communities segregated by property type or allowing large apartment complexes to take over quiet single-family streets, we can focus on “gentle density.”
Gentle density involves developing small multi-family buildings in traditionally single-family areas. Buildings with 2-10 units spread across different communities could dramatically alleviate the housing crisis without overwhelming or dramatically changing the character of any single neighborhood.
This is what Gatsby has been doing since 2016. Working within the current legal and regulatory framework, Gatsby has added hundreds of housing units to LA’s residential inventory without altering neighborhood characteristics.
We look for neglected single-family homes and vacant single-family lots that can be converted into small, unobtrusive multi-family developments. These projects can typically be completed in under two years, providing potentially high returns to our investors comparatively quickly while supporting the local housing community.