Part 4/7:
The Threat to New Construction and Market Stagnation
Altman warns that the current policies could cause a significant slowdown in new construction. Developers, deterred by restrictions on profitability, would avoid building new units altogether. This reluctance would further constrain supply, counteracting the goals of affordability and access.
He notes that the lack of new developments is already a problem, with only about one percent of Los Angeles homes changing hands annually—a sign of a sluggish market. Without new supply, even existing rental units may become scarce or deteriorate into subpar conditions.