Why Does It Cost So Much to Build in California? Two New Papers on Construction Costs

A culmination of several years of work on the rising costs of construction, today the Terner Center has released two new reports: The Hard Costs of Construction: Recent Trends in Labor and Materials Costs for Apartment Buildings in California and The Costs of Affordable Housing Production: Insights from California’s 9% Low Income Housing Tax Credit Program.

The consequences of the COVID-19 pandemic are dire, and require an urgent governmental response that prioritizes emergency aid focused on keeping people housed, as our Faculty Director Carol Galante has recently argued. In a state with an already severe housing crisis, the need for new housing will only become more acute as the impacts of both the pandemic and efforts to slow it accrue in the coming weeks and months. Yet the high cost of building in California represents an essential barrier to expanding the supply of housing affordable to all. We must ensure that we can produce housing quickly and efficiently.

Understanding what has been driving costs is critical to finding sustainable solutions. Each of the papers released today presents new data to illuminate the factors that contribute to the high costs of building housing in California, and suggest avenues for future reforms. Read findings from the study in a summary blog post here, and read more of our work in The Cost of Building Housing Research Series here.