Multifamily housing in California costs twice as much to build than in Texas

An analysis by policy research institute RAND found that building multifamily housing in California costs twice as much as in Texas.

Much of the difference is driven by state and local policies that contribute to long permitting and construction timelines, and higher local development fees. RAND based its findings on cost information from more than 100 completed apartment projects.

“The high cost of housing and its associated effect on homelessness is a defining policy issue in California,” RAND says in a news release. The time to bring a project to completion in California is more than 22 months longer than the average time required in Texas. Municipal impact and development fees average $29,000 per unit in California, compared to less than $1,000 per unit on average in Texas and $12,000 per unit in Colorado.

“California is significantly more expensive than both Colorado and Texas in every cost category that we examined,” said Jason Ward, lead author of the report and an economist at RAND. “One way to address California's high housing costs is to look for lessons from states where it is easier and less expensive to build new housing.”

The report recommends that California policymakers consider adopting rules similar to a Texas state law that requires local jurisdictions to approve or deny a proposal for a housing development within 30 days or else it is presumed to be approved. Officials should also consider policies mandating synchronized construction inspections, which commonly occur sequentially.

The report also recommends that policymakers reconsider the effects of municipal impact and development fees that are roughly 10 to 40 times the level observed in Texas.