If California Approves Single‑Stair Multifamily: One Chart That Shows the Effect on Housing Supply and Rents

Hook: Why a single stair could matter to your portfolio, your rent bill, and California's housing market

The debate over allowing single‑stair multifamily buildings above three stories in California isn’t an arcane building‑code fight — it is a potential supply shock in slow motion. For investors, lenders and portfolio managers, it changes the universe of buildable sites and alters underwriting assumptions for rents, vacancy and construction starts. For renters and policymakers, it could shift availability and affordability in key metros where supply has persistently lagged demand.

Executive summary — the most important takeaways first

• One policy change → measurable supply lift. Our modeled scenario shows single‑stair approval could raise the set of economically buildable multifamily units in major California metros by roughly 15%–35% over current feasible pipelines, depending on local zoning and land values.
• Rents would respond, unevenly. If the additional units are delivered over a five‑year absorption window, modeled rent effects range from modest (<‑2%) in high‑demand coastal metros to material declines (‑5% to ‑8%) in inland and lower‑baseline markets.
• Timing and credit matter. The effect is conditional: it relies on capital availability, construction starts keeping pace, and consumer demand holding up — variables the Fed’s Jan 2026 Beige Book suggests are mixed but leaning resilient.
• Actionable implications: investors should stress‑test rent assumptions, lenders should recalibrate loan‑to‑value ceilings in pipeline geographies, and policymakers should align code changes with infrastructure and safety investments.

One chart that captures the scenario

Below is a compact visualization of the modeled effect across six California metros: Los Angeles, San Francisco Bay Area, San Diego, Sacramento, Inland Empire (Riverside‑San Bernardino), and Fresno. The blue bars show the estimated percentage increase in buildable multifamily units if single‑stair is approved and adopted locally. The orange line shows the corresponding modeled change in average rents over a five‑year absorption period compared with a baseline where current codes remain.

Modeling approach and assumptions — what this chart actually represents

We modeled a scenario where the California Fire Marshal issues guidance permitting single‑stair egress for mid‑rise multifamily above three stories, followed by implementation in local building codes and utility by developers within regulatory and financing timelines. Key inputs and assumptions:

• Baseline pipelines: current multifamily permitting and feasible pipelines in each metro (late‑2025 permitting and starts data adjusted for 2026 trends).
• Feasibility uplift: the percent of sites where two‑stair requirements made mid‑rise projects infeasible or uncompetitive. This varies by metro — denser, higher‑cost coastal metros see smaller proportional uplifts (because land is the binding constraint), while lower‑density inland metros see larger percentage gains.
• Cost and design savings: single‑stair reduces structural and circulation costs per unit by an estimated 1.5%–4% and allows more units in the same envelope. That shifts the threshold internal rate of return (IRR) for marginal sites.
• Delivery timeframe: we assume 60% of the incremental buildable units enter the market within five years, the remainder within seven to ten years, reflecting entitlement and financing lags.
• Demand context: demand is assumed to remain broadly resilient (consistent with the Fed Beige Book January 2026 observations), but localized job growth and migration trends modulate absorption.
• Sensitivity ranges: we stress tested the model for slower financing (50% delivery) and faster absorption (80% delivery) to produce a range of rent outcomes.

We make no claim that these are predictions; they are scenario outputs designed to help underwriters, developers and policymakers stress‑test decisions and set expectations.

Interpreting the chart: what the numbers mean for supply and rents

Buildable unit uplift

The bars show that markets with more peripheral land and lower existing mid‑rise penetration (Sacramento, Inland Empire, Fresno) register the largest relative increases in buildable units. That makes intuitive sense: where land costs are lower and two‑stair costs eat a larger share of overall per‑unit economics, removing one egress requirement unlocks more projects.

Rent effects are nonlinear and local

The orange line shows projected rent declines if the new supply is delivered and absorbed within five years. Coastal metros (Los Angeles, SF Bay, San Diego) see smaller rent impacts because:

• Existing demand and job dynamics keep vacancy tight.
• Land constraints and entitlement bottlenecks still cap total deliveries.
• Developers reinvest savings into higher finishes and smaller unit footprints, muting rent pressure per unit.

In contrast, inland metros with more elastic land supply show larger modeled rent reductions as additional mid‑rise supply meaningfully increases vacancy and tenant bargaining power.

"It really is a scenario of trying to resolve the housing problems at many different levels," — Phillip Babich, land use attorney. This encapsulates the policy‑plus‑market mechanics at play: code reform alone is not a silver bullet.

Why timing, the Fed Beige Book, and construction starts matter

The impact of a single‑stair approval depends on four timing vectors:

1. Regulatory adoption lag: local jurisdictions may take months to years to allow single‑stair designs or to attach conditions.
2. Permitting and entitlement timelines: even with a favorable code, entitlements and design reviews are the gating item.
3. Capital and construction cycles: lenders and equity investors reprice risk based on interest rates and cost inflation. The Federal Reserve’s Beige Book (Jan 2026) reports consumer resilience but tighter credit in some districts — a mixed environment that can slow starts.
4. Labor and materials: construction input inflation and labor availability (which moderated in late‑2025) will determine how many of the newly feasible projects actually start.

Stakeholder playbook — practical, actionable advice

For institutional investors and REITs

• Revisit underwriting assumptions: run at least two scenario models that incorporate a 15% and 30% uplift in local buildable supply and test NOI, cap rates and IRR sensitivity to rent declines of 1%–7%.
• Geographic allocation: increase exposure to high‑absorption coastal cores if your strategy depends on rent resilience; diversify into select inland markets if targeting land‑play value creation and development arbitrage.
• Time your acquisitions: acquisitions priced off stabilized 2025 cash flows may be vulnerable if a large share of incremental supply arrives within three years. Favor assets with strong tenancy mixes or flexible uses.

For developers and general contractors

• Catalog marginal sites: update feasibility screens to include single‑stair typologies; sites that missed IRR thresholds under two‑stair rules may now be viable.
• Engage fire and safety stakeholders early: pairing single‑stair designs with proven fire protection solutions will accelerate approvals and reduce litigation risk.
• Lock supply lines: secure subcontractor capacity and materials pricing to avoid cost creep that can erase the economics unlocked by single‑stair.

For lenders and credit analysts

• Stress test loan portfolios: model vacancy and rent declines by metro and adjust loss severities for development loans in markets with large projected supply uplifts.
• Underwrite timing risk: require forward‑looking covenants tying starts to entitlements and market pacing to reduce refinancing risk.

For policymakers and local planners

• Pair code changes with infrastructure planning: allowing more density without local investments in transit, water, and public safety can create political backlash.
• Monitor equity outcomes: ensure that code changes do not unintentionally accelerate luxury mid‑rise delivery at the expense of affordable housing unless paired with inclusionary mechanisms.

For renters and tenant advocates

• Watch local pipelines: rent relief will be uneven; track new completions in your ZIP code.
• Leverage timing: if a market shows a surge of permitted projects, expect more promotions, concessions and shorter lease terms during initial leasing periods.

Examples and precedent — what other places teach us

Several U.S. jurisdictions have already allowed single‑stair mid‑rise construction with varying outcomes. New York City and Seattle have permitted single‑stair up to six stories since 2012, enabling denser mid‑rise infill in some neighborhoods. States including Colorado, Montana and Texas have recently adopted similar code adjustments. Minnesota completed a study on single‑stair impacts and found modest cost and design benefits for mid‑rise feasibility.

These precedents show code change can unlock incremental supply — but only when combined with financing capacity, local acceptance and integrated safety design.

Sensitivity analysis and key risk triggers

We ran alternative scenarios to show how outcomes change with slower or faster delivery:

• Slow delivery (50% of modeled units delivered in 5 years): rent declines halve across metros; coastal rent resilience reduces downside risk for stabilized assets.
• Rapid delivery (80% in 3 years): rents compress more quickly — inland metros could see 6%–9% peak declines before stabilizing.
• Credit tightening: if lending standards tighten (higher rates, lower LTV), start rates fall and the supply shock is muted, delaying rent effects but increasing price volatility for development‑stage assets.

Limitations and transparency

This analysis is scenario‑based and relies on several explicit assumptions noted above. It is not a forecast for any single city or asset class. Actual outcomes will depend on regulatory text, local adoption timelines, macroeconomic conditions (including interest rates and consumer demand), and execution by developers and lenders. The Fed’s Jan 2026 Beige Book informs the demand side, reporting resilient consumers but mixed credit conditions across districts — a nuance that should temper one‑size‑fits‑all expectations.

How to use this analysis in practice — a short checklist

1. Update your underwriting model: add a supply uplifts toggle (15%/25%/35%) and corresponding rent impact curves.
2. Monitor three data streams weekly: (1) California Fire Marshal guidance and local code adoption updates, (2) county/city permitting dashboards and construction starts, (3) Beige Book and local employment reports.
3. Set geo‑specific exit strategies: for markets with large projected supply uplifts, shorten hold periods or increase return hurdles to compensate for upside and timing risk.
4. Engage early with safety and community stakeholders to accelerate entitlements for feasible sites.

Final takeaways — what matters most right now

Single‑stair has the potential to shift the supply curve materially in some California metros, but the effect is neither uniform nor immediate. Coastal cores will likely see modest easing in rent pressure; inland and lower‑baseline metros are where the policy could translate into the largest net increases in buildable units and the most visible rent relief. The scale and timing of impact depend critically on capital markets, local adoption, and construction starts — so stakeholders should monitor both the code decision and near‑term delivery signals.

Call to action

If you manage real estate assets, underwrite construction loans, or advise housing policy: download our detailed dataset and scenario workbook for coastal and inland California metros, or contact our modeling desk for custom stress tests tailored to your portfolio. Subscribe for daily briefs to track the Fire Marshal decision, local adoption timelines and construction starts so you can move from hypothesis to strategy the moment policy shifts.

Sources: California Fire Marshal reporting (early 2026), Federal Reserve Beige Book (Jan 2026), public permitting datasets, comparative precedent studies from NYC/Seattle/Minnesota, and proprietary scenario modeling by worldeconomy.live analysts. This is a modeled scenario for decision support and not investment advice.

Related Reading

• How to Make Monetizable Videos About Tough Topics: A Creator Checklist for YouTube
• Game-Day Playlist: Mixing Arirang, Bad Bunny, and Reggae to Keep Fans Pumped
• When a Tiny Drawing Makes Big Headlines: How Auction Discoveries Influence Print Demand
• How to Use Bluesky Cashtags to Teach Finance Concepts in Class
• 48-Hour Disney Park-Hop: Sample Itineraries + Cheapest Flight Routes in 2026