How much multi-family housing is built in SLO County each year? New study shows growth
San Luis Obispo County is making inroads in its attempt to add more housing to its tight market — but what kind of housing is actually being built?
According to new report from Construction Coverage on multi-family housing production, single-family housing was still the main form of housing being built in the San Luis Obispo-Paso Robles metro area.
According to the report, multi-family housing makes up around about a fifth of all housing in the metro area’s market — good for 78th out of 217 among small metros and 283rd of all 371 metros surveyed for the report.
Max Zappas, CEO of Atascadero-based Z Villages Management and Development, said in recent years that multi-family housing has gained traction as opportunities for single-family housing have narrowed.
“Gradually over time, it’s been harder and harder to build things on the environmental side,” Zappas said. “Getting things like that approved environmentally and certified and then not litigated is lot more challenging than infill and multi-family in general. There’s been a big surge in mixed-use.”
Why is multi-family housing becoming more common in SLO County?
Damien Mavis, a multi-family home builder with Covelop Inc., said part of the region’s recent adjustment toward building more multi-family housing is the overall affordability of housing in California, which is currently sitting at a historic low.
“From a builder’s perspective and a housing advocate’s perspective, I think it’s important to realize that as housing becomes more and more and more expensive, builders and developers should be focusing on condominiums and other multi-family housing opportunities — both for sale, like townhomes and condos and cottages, as well as for-rent apartments, because I think that that that type of building has been sort of underrepresented in SLO County for a long time,” Mavis said. “For a very long time, building single family homes has been pretty much on top, and I think as those get more and more out of reach, we need to be building and developing projects that are more in reach.”
In 2024, 38.8% of all new housing authorized in the San Luis Obispo-Paso Robles area was multi-family, according to the Construction Coverage report — the 58th-largest share of new housing unit authorizations among small metros of 350,000 residents or fewer.
That comes out to around 373 multi-family and 589 single-family housing unit authorizations in 2024 — an overall decrease from 2023’s multi-family home production, during which 42.9% of the 1,111 new housing unit authorizations were in multi-family projects.
Despite its comparatively low population size, SLO County’s 2024 multifamily housing authorization rate of 38.8% ranked in the top third of the 371 metro areas analyzed by the report, placing 121st overall. In total, multi-family housing makes up 19.8% of SLO County’s stock.
The county is approving multi-family housing at a higher rate, but it has a lower stock of multi-family housing in its existing market compared to neighboring regions.
For example, the Santa Maria-Santa Barbara metro area’s housing market was 33.8% multi-family housing in 2024. It ranked ranked 64th in the midsize metro category for multi-family housing approvals with 23.6%.
To the north, the Salinas metro area’s housing market consisted of 26.9% multi-family units and saw 25.6% of new housing approvals fall under the multi-family category.
Zappas said many cities in San Luis Obispo County are relatively built-out as is, making maximizing as much of the available building space as possible the name of the game. Because single-family housing can be more cost-intensive for a builder in smaller developments, it either must be built individually or in small handfuls — unless more land can be added to a city to accommodate a larger development, he said.
Developments such as Dana Reserve and some of the larger single-family home developments in the North County near Atascadero and Paso Robles tend to build on the outskirts of their existing municipalities and must be annexed into the city limits to get around the municipality’s existing entitlements and zoning, Zappas said.
“Mixed-use projects that are infill projects are typically very low-risk from an entitlement perspective, and that is what we tend to focus on as a company,” Zappas said. “There are single-family builders that won’t even do entitlement because there’s just too much risk.”
Multi-family housing offers less risk for builders
On the other end of the cost spectrum, Zappas said multi-family housing is reliant on adding enough units to make the project pencil out for the builder.
Mavis said that carries some risk in itself, as it can be more costly to develop multi-family buildings than single-family homes due to the up-front costs and the fact that multi-family units can’t start making back some of that investment until all units in the project are complete.
He also said high interest rates makes financing larger multi-family housing more expensive, potentially explaining some of the decline in multi-family housing authorizations between 2023 and 2024. Should interest rates continue to stay elevated north of 6%, it could constrain multi-family housing production in coming years, Mavis said.
“Prior to the recent interest rate increases, we had relatively high rents and low interest rates, that was the ideal combination to make building apartments very attractive,” Mavis said. “Now, with interest rates higher, it makes financing those apartment projects more difficult, so I would expect the pace of apartment construction to slow.”
Construction Coverage’s data showed that overall, new multi-family housing in San Luis Obispo County tends to be concentrated in larger housing complexes. Just four housing units were authorized in 2024 in structures designed to contain two housing units, and none were authorized in structures designed for three to four units.
That means that the 369 housing units authorized this year in structures of five or more units were concentrated in larger multi-family developments rather than duplexes or small-scale multi-family structures.
Again, this shows some decline from the previous year, during which 22 multi-family units were located in two-unit structures, 236 units were located in structures of three to four units and the lion’s share of multi-family homes — 419 in total — were located in structures with more than five units.
All of this suggests that multi-family housing has declined slightly and become more concentrated in larger structures, Zappas said.
“Three to four units is still a substantial investment — it’s not really going to be a mom and pop, but it’s not really going to be a bigger owner, either,” Zappas said. “I don’t think it’s too surprising that five or more is kind of the cutoff.”
