SB9 Three Years Later: What Actually Happened

237 units approved in LA. 7 in San Diego. That's the reality of SB9 adoption through 2024.

SB9 was supposed to unlock massive housing potential by allowing lot splits and duplexes on single-family lots. It hasn't played out that way. But the investors who understand why adoption has been slow also understand why the opportunity is larger now than it was when the law passed.

The Hard Numbers

Los Angeles approved 237 units through SB9 in 2024. San Diego submitted 23 applications and approved only 7 permits. Other major cities like San Francisco and Sacramento have even lower numbers or unclear data. Statewide, the actual number of completed SB9 projects is in the low hundreds.

The law is on the books, but the rollout has been slow.

Why Adoption Has Been Slow

Local government pushback. Cities used discretionary hearings, design review, and procedural loopholes to slow down or block applications. Some required environmental reports, adding months and thousands in costs for small lot splits.

Confusing process. For many investors, the approval process was a maze. The paperwork, time, and risk often didn't make sense compared to other development options.

Community resistance. Neighborhood-level opposition is real. Political pressure meant city councils dragged their feet or stalled decisions.

Market hesitation. Investors largely avoided SB9 because the math was uncertain. Unknown approval timelines made underwriting impossible.

What's Changing

Mayor Bass in LA has pushed departments to streamline SB9 applications. Some council districts have dropped onerous requirements. SB 450 closed the loopholes cities were using to stall. Legal pressure and advocacy groups keep the heat on cities to comply.

The regulatory environment is improving faster than most investors realize.

The Opportunity Nobody Believed In

SB9's slow start led many investors to write it off. They moved on to ADUs or large multifamily. That's a mistake.

With only 237 units approved in all of LA, the demand-capacity gap is enormous. Hundreds, maybe thousands, of eligible lots remain untouched. The investors who gave up created less competition for the ones who stuck around.

The math is straightforward. An SB9-eligible single-family lot in LA might cost $800,000. Splitting the lot and building two units on the new parcel creates significant value. If you can build or sell two units for $1.2 million total, that's a $400,000 spread minus construction costs. The returns work if you manage the approval process correctly.

The barrier is bureaucracy. Understand how to navigate it, and you have a moat that most investors can't cross.