In 2016, the McKinsey Global Institute (MGI) published A tool kit to close California’s housing gap, extending our earlier work on affordable housing worldwide and on productivity in the construction industry.  California introduce a number of new housing incentives and legislative proposals, including measures to increase density near transit. The City of LA is leading the state in housing production.

With the addition of more than 88,000 units since 2010, it has produced more units relative to its population growth than any other city in California. We estimate that the shortage of affordable housing depresses GDP across the metro area by more than 2 percent. This translates into $18 billion to $22 billion in lost output every year for the City of LA, and almost double that amount for all of LA County.

Los Angeles is taking action. Voters approved $1.2 billion under Proposition HHH to accelerate development of affordable housing and permanent supportive housing for the homeless; more than 9,000 PSH units have been approved for funding since 2016.10 Incentives built into Measure JJJ have helped create more than 3,800 affordable units near mass transit since its adoption in November 2017.11 In addition, the city is moving to simplify the zoning code, digitize the permitting process, and provide case-management services to speed through high-priority projects. LA County has significantly increased funding through the Affordable Housing Trust Fund, Measure H, and the No Place Like Home program. Almost all Proposition HHH projects in the City of LA have also received funding from the county. Despite this progress, a huge share of the population remains underserved. The initiatives currently under way need to be expanded and accelerated even as Los Angeles continues to look for new solutions. It will take not only public agencies but developers, nonprofits, investors, and community groups working together to address a challenge of this magnitude.