Only 9% of new housing units added to the Los Angeles market in the past five years are affordable to people earning less than the area’s median income.

For L.A. County, just 12% of new housing reaches the affordable level, according to a study by the McKinsey Global Institute.

That means that 70% of households in the city can’t afford market-rate units without being stretched financially. For the county as a whole, 1.9 million households are scrambling to afford market-rate units.

The report, “Affordable Housing in Los Angeles: Delivering More — and Doing it Faster,” was released Nov. 21. It was conducted with the Los Angeles Business Council Institute, the Los Angeles Coalition for the Economy & Jobs, and United Way of Greater Los Angeles.

The study argues that density bonuses have been successful in Los Angeles. The Transit Oriented Communities Program offers incentives such as reduced parking requirements for projects built near public transit that include affordable units.

Density bonuses, the report added, could be even more effective if combined with new formats and construction techniques such as micro-units and coliving developments.

Coliving units have been popping up around L.A. These spaces are generally furnished apartments with flexible lease terms and shared common spaces. By June, the top coliving players had 3,700 units available nationwide and 9,300 units in the pipeline, according to a report from Cushman & Wakefield Inc.

Micro-units are defined by the Central City Association of Los Angeles as apartments that run 140-350 square feet.

Groups working on affordable housing or permanent supportive housing projects in L.A. right now include Thomas Safran & Associates Inc., Skid Row Housing Trust, Coalition for Responsible Community Development, Affirmed Housing Group Inc., KTGY Architecture and Planning, Figueroa Economical Housing Development Corp. and Linc Housing Corp.

The study pointed out that thousands of parcels in L.A. are not using the full density allowed, however. If they did, the city could add 1.5 million new housing units.

Jonathan Woetzel, a director of the McKinsey Global Institute and one of the report’s authors, said in a statement that it was “time to turn the region’s affordable housing crunch into an opportunity to reimagine Los Angeles.”

He added that the area has a large public works package but needs to build housing near transit, take on nontraditional housing formats and use prefab construction. He said that streamlining financing, entitlements and approvals would help with development in L.A.

“Under current market conditions, the economics do not work for developers to build standard units that are affordable for households earning less than 120% of the area’s median income,” according to the report.

The report also found that the lack of affordable housing decreased gross domestic product in the area by $18 billion to $22 billion annually in the city of Los Angeles and double that for the county.

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