The piece examines why the simplistic prescription “Just build more housing” fails in built-out California coastal cities, using South Bay examples—Lomita, Torrance, and Redondo Beach—to show how price-to-income ratios moved from roughly 3× in 1970 to 9–11× by 2025, why inflation does not explain the gap, what types of supply actually matter, and why cost control and local decision-making are the crucial levers for preserving affordability.
In the postwar era California coastal neighborhoods were mostly built out by 1970, and housing costs tracked incomes in a predictable way: a typical home cost about three times annual household income. That relationship provided a form of affordability where ownership followed a path tied to earnings instead of inheritance or extraordinary wealth. By 1980 price-to-income ratios crept into the 4.5× range, signaling a growing divergence between wages and home values. The divergence steepened into a structural gap by 2025, when median home prices in the South Bay reached roughly nine to eleven times median household income.
Inflation alone cannot account for the change. Adjusted for inflation, a typical 1970 home would be worth roughly $225,000 to $280,000 today, and a 1980 home would land between about $340,000 and $485,000. Actual 2025 prices, however, fall between about $890,000 and $1.45 million, creating a permanent disconnect between typical wages and the cost of ownership. Restoring 1970s-style affordability through wage growth would require median household incomes to triple or quadruple almost overnight—figures like $300,000 in Lomita, $400,000 in Torrance, or $480,000 in Redondo Beach—which is not a realistic policy outcome.
That reality leaves supply as the critical lever, but not all supply is created equal. Greenfield development—building on vacant land—is cheap and adds real units without displacing existing stock. In contrast, replacement housing in built-out cities tends to involve teardowns of modest homes followed by larger, more expensive replacements, which often add little or no new units and drive up local prices. When a $1.2 million house is replaced with a $3 million house, net new units are zero and affordability worsens. Counting that as effective development misses the point.
There are four practical ways to add housing in cities that are essentially built out, and each has trade-offs. Teardowns and replacement dominate current activity but do little for entry-level buyers. Strategic vertical growth can work in selected nodes if infrastructure upgrades accompany density, but wide-brush mandates break local trust and can produce inappropriate projects. Redevelopment and reuse of underused commercial parcels create real units but are limited by capital costs and finite parcels. Incremental density—duplexes, fourplexes, ADUs, small apartments, and mixed-use along aging corridors—is the most scalable option, but it only helps if approvals are fast and predictable.
Approval speed and cost control determine what builders can pencil. When the approval process is slow, risky, and expensive, small and local builders vanish and only large, high-end projects survive. That shift increases financialization of housing and raises rents and sale prices. State-level mandates that focus solely on unit counts without addressing underlying cost structures tend to produce bigger, more expensive developments that do not serve working families.
“Just build more housing” sounds simple, but in built-out cities housing can be added only through replacement or incremental density, and those approaches have to be managed with an eye to costs. If approvals and fees make projects uneconomic for modestly priced housing, the market delivers luxury units or none at all. Allowing modest growth in the right places, and keeping development predictable and affordable to build, makes it possible to add rental options and ownership pathways without accelerating displacement.
Relying on attracting higher-paying employers to fix affordability is also flawed. Even if a city brings in top-decile jobs, wage gains concentrate at the top while housing demand rises across the market, pushing prices up faster than most households’ incomes. Job growth without matching entry-level ownership or rental supply increases displacement and erodes middle- and working-class stability. Built-out cities face parallel constraints on where jobs can locate and how much new housing the local land supply can absorb.
For people entering the market affordability will look like more affordable rental options, opportunities to buy within regions that still have greenfield capacity, and the ability to move across metro areas rather than being locked into a single pricey city. Policymakers who treat all density as equivalent or assume mandates alone will lower prices miss the real mechanics: the cost of construction, approval timing, and local infrastructure constraints. Effective policy must control costs, speed approvals, and respect local planning so that incremental, practical supply can expand without producing only luxury outcomes.
Data from the South Bay shows the outcome when those controls are absent: prices detach from incomes and ownership becomes a function of inheritance, equity, or multiple high earners. Fixing that requires pragmatic, local solutions that reduce the cost and uncertainty of building modest housing, protect neighborhood character where appropriate, and expand genuine supply where the economics make sense. Without that focus, simply counting units will keep affordability collapsing even as official statistics show rising supply.
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