“Developers Only Build Luxury Housing”—And What Measure ULA Has to Do With It

One of the most common criticisms I hear—especially from renters—is this: Developers only build luxury housing, so new construction doesn’t help people who are already struggling.

That frustration is real. New buildings are expensive. Most renters don’t see themselves living in them. And when housing costs keep rising, it’s fair to question whether development is actually serving the people who live here.

But Measure ULA has made this tension worse—not better—and understanding why requires looking at how housing actually gets built in Los Angeles.

Why New Housing Looks “Luxury,” Even When That’s Not the Intent

In Los Angeles, it is extraordinarily expensive to build any housing. Before a single design choice is made, developers face:

• High land costs

• Years-long permitting and entitlement timelines

• Construction labor and material costs

• Seismic, fire, energy, and accessibility requirements

• Financing costs that accrue while projects sit in review

  
  

These costs apply to every project, regardless of whether it’s branded as luxury or modest. The result is that new housing almost always enters the market at higher rents—not because developers are targeting wealthy tenants, but because that’s the minimum required to make a project viable.

Affordable housing, counterintuitively, often costs more per unit to build than market-rate housing. It requires public subsidies, additional layers of review, prevailing wage labor, and long-term affordability restrictions that limit revenue. Without public funding, most affordable housing projects simply cannot move forward.

What Market-Rate Housing Actually Does for Renters

New market-rate housing doesn’t solve affordability overnight—but it plays a critical role in the housing system.

When new apartments are built:

• Higher-income renters move into them

• Pressure eases on older, more affordable buildings

• Renters compete less intensely for the same limited units

When housing doesn’t get built, higher-income renters don’t disappear—they compete for the existing housing stock instead. That competition hits hardest in the older buildings where most renters actually live.

Where Measure ULA Fits In

Measure ULA was designed to fund affordable housing and homelessness prevention. Those goals matter. But the way the tax is structured—imposed as a large, one-time cost at the moment of sale—has had unintended consequences for housing production and reinvestment.

By making apartment transactions more expensive, Measure ULA has:

• Slowed housing development

• Reduced reinvestment in existing apartment buildings

• Pushed capital away from Los Angeles

This doesn’t mean rents suddenly spike—Los Angeles has strong rent control laws. But it does mean:

• Fewer new units get built

• Older buildings wait longer for major repairs and safety upgrades

• Renters face fewer choices and less mobility

Most renters in Los Angeles live in buildings that are decades old. Those buildings rely on periodic reinvestment—often triggered by sales or refinancings—to fund seismic retrofits, plumbing and electrical upgrades, and basic habitability improvements. When transactions stall, those upgrades stall too.

The Real Tradeoff We’re Facing

The choice isn’t between “luxury housing” and “affordable housing.” It’s between:

• Building housing and reinvesting in what we already have, paired with strong tenant protectionsor

• Not building enough housing, and forcing renters to compete for a shrinking supply

Measure ULA, as currently structured, makes that second outcome more likely.

If we want policies that truly support renters, they need to do two things at once:

• Fund housing and homelessness programs

• Avoid discouraging the housing production and reinvestment renters depend on

Renters deserve stability, safety, and real options—not just good intentions. Getting there requires being honest about how housing works, and willing to adjust policies when they’re not delivering the outcomes we hoped for.