In July, it was reported that rents in Los Angeles County had fallen to a four-year low. While rents remained high compared to much of the nation, with a reported median price of $2,603 per month, the decline offers a glimpse of what can happen when governments liberalize housing restrictions and allow developers to build.
California’s housing crisis is largely self-inflicted, caused by decades of zoning restrictions and other regulations that have prevented developers from producing enough housing to meet market demand. Laws like the California Environmental Quality Act (CEQA) are often weaponized to delay or block new development, imposing significant costs and delays on infill housing projects across the Golden State.
While California still has a long way to go in terms of regulatory reform, recent declines in rental prices can be attributed, at least in part, to long-overdue policy changes. It was reported that the falling rents reflect “additional housing options provided by new multifamily development and accessory dwelling unit (ADU) construction,” in addition to post-COVID-19 market stabilization.
ADUs are secondary housing units located on residential properties, such as garages converted into living spaces or small detached homes. For decades, California heavily regulated ADU construction, restricting property owners’ ability to use their land productively and limiting the housing supply.
In recent years, however, the state has enacted reforms to make ADUs easier and less costly to build, allowing property owners to bring much-needed housing to the market. In fact, as of 2024, ADUs accounted for over 26 percent of all homes permitted statewide. In Los Angeles County, the housing type amounted for 37 percent of all new housing units certified for occupancy in 2025. All in all, the total number of ADUs permitted in California increased by 15,334 percent between 2016 and 2022.
Despite these improvements, housing prices in California remain exorbitantly high…
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