By Christopher Russell (Strategic Communications, Yimby LA); Samuel Maury-Holmes (Founder, Zenith Economics)
Summary
State housing reforms continued to inch forward in Q2 2026, while local policy friction persisted, especially around Measure ULA. Permitting activity held roughly steady as high interest rates (at 6.47%) weighed on the market. Los Angeles responded to key state laws with local implementation ordinances, including for SB 79 (Abundant and Affordable Homes Near Transit), effective July 1, and ongoing SB 684/1123 (Starter Home Revitalization Act) rollout for small-lot subdivisions up to 10 units. And the Citywide Housing Incentive Program (CHIP) continued to gain traction with 30,000 units moving forward attributable to its policy teeth.
Report Card
- Median rent holds at $2,068: The citywide median asking rent stood at $2,068 in June 2026, down 1.4% year-over-year and roughly flat month-over-month (Apartment List).
- Median sale price holds at $1.0M: The City of Los Angeles recorded a median sale price of $1.0M over the three months ending May 2026, down 0.7% year-over-year (Redfin). LA County’s median was $937,000, up 0.8% over the same period.
- Flat year-over-year sales at 4,946: Flat to slightly declining. In May 2026, 4,946 homes sold in the City of LA, a fractional drop from 4,962 a year prior (Redfin). Southern California regional sales were down 0.4% year-over-year, even as statewide volume rose 5.1% (CAR/MyNewsLA).
- Building permits rise to 1,800 range, dominated by multifamily: City-level monthly permits ran in the 1,000 to 1,800 range through Q2 (Open Data), with multifamily continuing to dominate the pipeline. The pace shows stabilization from earlier lows but is not enough to close the city’s 6th Cycle RHNA target of 457k units, or nearly 5k units per month for eight years, through 2029.
State and Local Zoning Reforms – SB79, SB1123
SB 79, the Abundant and Affordable Homes Near Transit Act, took effect statewide on July 1, 2026. In response, the LA City Council adopted a Phased Implementation Ordinance on June 23 that uses the bill’s built-in flexibility to delay full implementation across much of the city until 2030. The ordinance permanently excludes industrial employment hubs and sites more than a one-mile walk from stations, and temporarily exempts lower-opportunity areas, historic resources, and very high fire hazard zones. A companion Low-Rise Ordinance adds modest density (4–16 units) in select neighborhoods, helping the city meet the minimum zoning capacity required to qualify for the pause.
This approach mirrors strategies in several California cities and limits SB 79’s near-term local impact. For contrast, Palo Alto’s City Council declined to adopt an urgency ordinance before July 1, leaving a two-week window in which SB 79’s full default standards applied. Five housing applications were filed in that window alone, illustrating the latent developer demand that full implementation can unlock.
SB 1123 expansions facilitated more ministerial approvals for small-site subdivisions and starter homes. Those tools, combined with CHIP, have driven developer interest: a CHIP one-year progress report found 30,000 new LA homes moving forward, with 90% advancing through streamlined approval.
Measure ULA
Measure ULA remained the city’s most contested housing policy in Q2. Through April 2026, the tax has raised nearly $1.2 billion from 1,633 transactions. Research from RAND and the UCLA Lewis Center has linked ULA to reduced multifamily production. A 2026 RAND difference-in-differences analysis estimates a 31% decline in permitting for projects of 20+ units and over 9,000 lost units through early 2026, building on an earlier Lewis Center parcel-level study that first identified the relationship.
The quarter’s most consequential development was the resolution of the Howard Jarvis Taxpayers Association (HJTA) statewide ballot threat. HJTA had qualified the Local Taxpayer Protection Act for November 2026, which would have capped transfer taxes at roughly 0.11%, effectively repealing Measure ULA. In a last-minute Sacramento deal, HJTA withdrew the initiative after the Legislature advanced ACA 22, a constitutional amendment requiring two-thirds voter approval for future local special taxes. The deal contained no transfer tax provisions; the statewide cap that would have repealed ULA was dropped entirely, and ULA continues unchanged.
Locally, the City Council voted 9–5 on June 17 to direct the City Attorney to draft a ballot measure granting a 10-year ULA exemption for newly constructed multifamily and mixed-use buildings. But on July 1, the Council voted to shelve that proposal before the ballot deadline, instead advancing a five-year exemption for Palisades Fire survivors and a pilot tax credit program reducing ULA rates to 1.5% for certain prevailing-wage residential projects. With local reform stalled and no transfer tax relief emerging from Sacramento, the second half of 2026 will likely see continued tension between ULA’s proponents and its documented costs to housing supply.
Outlook
State streamlining continues to add zoning capacity, and CHIP is generating real pipeline activity with nearly 30,000 homes moving forward in its first year, but local barriers persist. ULA’s supply-side effects remain unresolved, construction costs are elevated, and the phased SB 79 implementation delays full transit-oriented density for most of the city until roughly 2030. Sustained production gains will require more predictable approvals for missing-middle housing and policy fixes that increase supply.