Why does San Diego lead California in approval of | Real Estate news

As Los Angeles grapples with a housing scarcity, it might study from San Diego, which has proved better at convincing construction corporations to construct more.

The metropolis is more welcoming to builders, industry insiders say, with fewer rules and charges, better planning and less rent control.

“It is easier to build in San Diego over Los Angeles because of its legal structure, political culture and defined processes,” said Kevin Shannon, co-head of capital markets at real estate brokerage Newmark, which is overseeing the sale of a sprawling development web site in San Diego that is zoned to have hundreds of residences.

The outcome: As of last quarter, the quantity of new residences under construction in San Diego County rose 10% from three years earlier, CoStar data show. New condominium construction in Los Angeles County tumbled 33% over the same period, hitting an 11-year low in the three months through December. San Diego is increasing its condominium pool at practically twice the speed of L.A. and other major metropolis clusters in the state.

L.A.’s emptiness charge is among the bottom in the nation and rental charges are among the best nationwide. Still, the availability of recent rental items, which make up the majority of new housing in Los Angeles, is scaling down despite strong demand.

Although local lawmakers create rules to defend renters and keep rents down, hoping to fight homelessness, builders and economists warn that the improper rules often can add to the fee of building and sustaining residences, making it onerous to make a revenue on new and current initiatives. People who already have residences could also be protected, but over the long run, fewer are constructed, they are saying.

Rent control has been at the middle of the talk not too long ago. The metropolis of Los Angeles just tightened its rent control.

It has just lowered the cap on rent will increase for rent-stabilized residences, a huge portion of town’s housing stock that homes practically half of town’s residents. Although the cap doesn’t apply to items constructed after 1978, it still discourages builders, as it sends the improper signal to those already nervous about restrictions.

At the state degree, a comparable housing invoice that would have halved the cap on rent will increase to 5% a 12 months died in the Assembly last week. Assemblymembers determined that too many restrictions may be counterproductive.

“That sounds nice and humanly caring and all that and warm and fuzzy, but someone has to pay,” said Assemblymember Diane Dixon (R-Newport Beach). “How far do we squeeze the property owners?”

San Diego doesn’t have conventional rent control, though it does implement less restrictive statewide tenant protections.

In Los Angeles, Measure ULA, recognized as the mansion tax, is another top cause that builders determine to construct elsewhere. They also level to other local rules that make it difficult to evict tenants who don’t pay their rent.

“L.A. has been redlined by the majority of the investment community,” condominium developer Ari Kahan of California Landmark Group said in October.

It’s simpler to do business in San Diego because of its real estate development insurance policies, project approval course of and general business-friendly angle, industry insiders said. It outlines what it desires in a basic plan, and if initiatives line up with that, they are often accredited at town workers degree.

“San Diego has a clear, enforced General Plan, and for the most part, it sticks to it,” Shannon said. “San Diego updates its Community Plan and then lets projects proceed if they comply.”

“In contrast, L.A.’s General Plan is outdated and inconsistent,” he said. “Almost everything requires discretionary approvals.”

A view of the downtown San Diego skyline Jan. 16, 2026. It’s simpler to do business in San Diego because of its real estate development insurance policies, project approval course of and general business-friendly angle, industry insiders said.

(Sandy Huffaker / For The Times)

Elected officers in L.A., including the City Council, have the discretion to determine whether or not a new project may be constructed, which might add months to its approval course of as the proposal winds through City Hall and public conferences.

“The City of San Diego continues to prioritize the permitting and development of new homes to address our region’s housing needs and support a better future for all San Diegans,” said Peter Kelly, a spokesman for town Planning Department. “Through updated community plans, streamlined permitting processes and proactive implementation of state housing laws, we are working to increase housing supply and affordability in all neighborhoods.”

The metropolis updates its Land Development Code yearly to streamline the allowing course of and speed up housing manufacturing, he said. It also provides capability to construct new houses through rezoning and updates to town’s neighborhood plans, with a focus on inserting new houses and jobs close to transit, parks and companies.

“If we can bring more supply, it will hopefully bring down rents,” said Kip Malo, a real estate broker in JLL’s San Diego workplace.

Most new residences are being constructed exterior of downtown San Diego, Malo said. “The city has made a concerted effort to try to clean up downtown and it has gotten better, but it’s still got a ways to go.

Of course, developers in San Diego still face the same headwinds that affect developers in other cities, such as interest rates that make construction loans more expensive than they have been in years past.

Recent policy out of Washington also hasn’t helped. Higher tariffs have driven up the prices of construction materials and equipment, while the crackdown on undocumented workers has thinned and spooked much of the international workforce on which the industry depends.

An apartment building is under construction in downtown San Diego on Jan. 16, 2026. In L.A., elected officials, including the City Council, have the discretion to decide whether a new project can be built, which can add months to its approval process as the proposal winds through City Hall and public meetings.

(Sandy Huffaker / For The Times)

California’s construction industry depends on immigrant workers. Around 61% of construction workers in the state are immigrants, and 26% of those are undocumented, according to a June report from the Bay Area Council Economic Institute.

San Diego is “still California,” Malo said, and has hurdles to get initiatives accredited that aren’t confronted by builders in Texas and other states with more lax necessities for new initiatives, Malo said, but “the political winds have shifted in developers’ favor.”