How can affordable housing cost $1 MILLION per unit to build?
That's the question I had when I saw this story.
A 54-unit affordable-housing project in West Marin is moving forward with an estimated development cost of about $55.4 million.
That's roughly $1 million per unit.
Before everybody loses their mind:
That does NOT mean residents are paying $1 million for these homes.
This is also a complicated redevelopment of a former Coast Guard property with existing buildings, infrastructure, construction requirements and multiple sources of public/nonprofit financing.
But I still think the number should make Californians ask a bigger question:
Why is housing so incredibly expensive to create here?
We spend a lot of time arguing about who should be able to afford a home.
Maybe we also need to spend more time asking why it costs so much to produce one in the first place.
Because California doesn't just have an affordability problem.
We have a housing-production problem.
What do you think: reasonable considering everything involved, or has California made building housing way too expensive?
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How Can Affordable Housing Cost $1 Million Per Unit in California?
There are certain headlines that almost demand an emotional reaction.
Here's one of them:
An affordable-housing project in California is costing roughly $1 million per unit to develop.
If your immediate reaction is, “How in the world is that affordable?” you're probably not alone.
But the actual story is more complicated—and much more interesting—than the headline.
A major affordable-housing project in West Marin is moving forward after securing financing. The Tamalko Homes development is planned for the former Coast Guard property near downtown Point Reyes Station.
The project is expected to create 54 affordable rental units and 135 bedrooms on a roughly 33-acre site. Total development costs are estimated at approximately $55.4 million, according to reporting from the San Francisco Chronicle.
That's roughly $1 million in development cost for every unit ultimately created.
Before we turn that into an internet meme, however, we need to understand what that number actually means.
Because this is not a developer building 54 ordinary apartments for $1 million apiece and handing residents the bill.
Affordable Doesn't Describe the Construction Cost
This is probably the first misconception worth clearing up.
When we describe housing as “affordable housing,” we're generally talking about the affordability requirements imposed on the units and the households they're designed to serve.
We're not saying the property itself was inexpensive to develop.
Those are two entirely different things.
Affordable housing can actually be extremely expensive to create.
Land costs money.
Labor costs money.
Materials cost money.
Architecture and engineering cost money.
Infrastructure costs money.
Permitting costs money.
Financing costs money.
Environmental work can cost money.
Renovating existing structures can cost money.
And when a project involves public financing and multiple regulatory requirements, there can be additional layers of complexity.
The West Marin project is a particularly useful example because it isn't simply a vacant lot where somebody is putting up an apartment building.
This Isn't a Normal Construction Site
The project is being developed on the site of a former Coast Guard housing complex.
The Coast Guard left the property in 2014, and Marin County acquired the approximately 33-acre site in 2019 for roughly $4.3 million.
The redevelopment involves existing townhomes and barracks and is expected to ultimately produce 54 rental units, including housing intended for agricultural workers, retirees and other qualifying residents.
That context matters.
Taking an existing federal property and converting it into modern residential housing can create costs that wouldn't necessarily exist in a straightforward new subdivision.
But even after acknowledging all of that, the $55 million price tag raises a worthwhile question.
Why does creating housing in California cost so much?
California's Housing Problem Isn't Only About Buyers
Most housing-affordability conversations start with the consumer.
Home prices are too high.
Mortgage rates are too high.
Rents are too high.
People don't earn enough.
Those are all important parts of the equation.
But there's another side:
What does it cost to create the housing in the first place?
California can provide down-payment assistance.
Cities can subsidize rent.
Lenders can create different financing programs.
Governments can offer tax incentives.
But none of those things fundamentally eliminate the cost of creating another physical unit of housing.
If California wants housing to become meaningfully more affordable over the long run, supply matters.
And supply becomes much harder to increase when producing housing is extraordinarily expensive.
Why Is Housing So Expensive to Build?
There's no single culprit.
California is an enormous state, and construction economics in Fresno look nothing like construction economics in San Francisco or coastal Marin County.
But several factors can contribute to development costs.
Land can be extremely expensive in desirable California markets.
Labor costs are substantial.
Building materials have become more expensive.
Projects can face permitting and entitlement expenses.
Environmental review and site preparation can add cost and time.
Financing becomes more expensive when projects take longer.
Infrastructure may need to be added or upgraded.
And every additional month between acquiring a site and completing a project can create carrying costs.
This is why housing policy gets complicated very quickly.
There isn't a single button labeled “MAKE HOMES CHEAPER.”
Time Is a Housing Cost
This is one of the least interesting parts of real estate development—and perhaps one of the most important.
Time costs money.
Imagine a developer acquires property today but can't begin construction for years.
There may still be financing costs.
Consultants.
Engineers.
Architects.
Legal expenses.
Taxes.
Insurance.
Administrative expenses.
And capital tied up in a project that isn't producing housing or revenue yet.
Those costs don't disappear.
Eventually, they become part of the economics of the project.
That's why conversations about speeding up housing approvals aren't simply about making life easier for developers.
Time ultimately affects what housing costs to create.
Why Not Just Build Somewhere Cheaper?
Sometimes we should.
But that creates another problem.
People generally need housing reasonably close to where they work and live.
West Marin is a particularly interesting example.
The Chronicle reports that roughly half of renters in the area are considered very low income, while more than a quarter of households spend over half their income on rent.
Agricultural workers and other local employees still need somewhere to live.
If the only affordable housing is two hours away, that isn't necessarily a functioning housing solution.
This is one reason housing shortages in expensive coastal communities can eventually become labor shortages too.
Teachers need homes.
Restaurant workers need homes.
Healthcare employees need homes.
Construction workers need homes.
Police officers and firefighters need homes.
The people who make a community function can't all commute from another state.
California's Affordability Numbers Show the Bigger Problem
The state's affordability statistics are already difficult.
According to the California Association of Realtors, only 19% of California households could afford the state's median-priced existing single-family home during the second quarter of 2026.
The median price used in that analysis was $916,750.
C.A.R. estimated that a household needed a minimum annual income of approximately $228,400 to qualify for that median-priced home under its assumptions.
Condos and townhomes were more attainable—but still only 30% of households could afford California's $670,000 median-priced condo or townhome.
That's the consumer side of the affordability crisis.
Today's Marin story shows the other side.
Creating additional housing isn't cheap either.
Does $1 Million Per Unit Mean the Project Is Wasteful?
Not necessarily.
This is where social-media conversations can go off the rails.
You can't look at a single number and determine whether every dollar was spent appropriately.
There are too many variables.
What exactly is being constructed?
What existing structures need rehabilitation?
What infrastructure is required?
What regulatory requirements apply?
What does the financing structure look like?
How long will the units remain affordable?
What services or site improvements are included?
Those questions matter.
But saying we shouldn't immediately call the project wasteful doesn't mean we shouldn't scrutinize the cost.
Quite the opposite.
When public money, tax credits and other subsidies are involved, taxpayers have every reason to ask whether we're producing housing efficiently.
Both things can be true:
Affordable housing can legitimately be expensive to develop, and California should still be obsessed with finding ways to make it less expensive to build.
The Missing-Middle Problem
There's another reason this conversation matters.
California housing discussions often become a debate between detached single-family homes on one side and large subsidized affordable-housing projects on the other.
There's a huge amount of housing that can exist between those extremes.
Condos.
Townhomes.
Duplexes.
Triplexes.
Fourplexes.
ADUs.
Smaller detached homes.
Manufactured homes.
Mixed-use developments.
Conversions of underused commercial properties where feasible.
California doesn't only need “affordable housing” as a government classification.
It needs more housing at more price points.
That's an important distinction.
Maybe We Need Smaller Homes Again
Look around many newer communities and you'll notice something interesting.
We got very good at building large houses.
But the classic California starter home has become increasingly difficult to find in many communities.
A 1,000- or 1,200-square-foot house isn't glamorous.
It may not have three living rooms, a giant kitchen and a three-car garage.
But historically, smaller homes provided an entry point into ownership.
That matters.
We spend enormous amounts of energy trying to make expensive homes affordable through financing.
Another approach is obvious:
Build less expensive homes.
That's easier said than done when land, labor, permits and infrastructure are expensive.
But it deserves a place in the conversation.
Housing Affordability Starts Before the Mortgage
As a mortgage professional, I obviously spend a lot of time thinking about the financing side.
Interest rates matter.
Down payments matter.
Credit matters.
Loan programs matter.
But financing can only do so much.
If the underlying housing stock becomes increasingly expensive to create, the mortgage industry can't magically solve the entire affordability problem.
We can help people finance housing.
We can't manufacture inexpensive land in coastal California.
That's why the long-term affordability conversation has to include supply, construction and regulation alongside mortgages.
The Question Californians Should Be Asking
I don't think the takeaway from the West Marin story should simply be:
“Government wastes money.”
Nor should it be:
“Affordable housing costs $1 million.”
Both are oversimplifications.
The more useful question is:
What makes housing this expensive to produce, and which of those costs can California realistically reduce?
Some costs are unavoidable.
Some may be necessary.
Some may be the price of building safely in an expensive region.
And some may be opportunities for reform.
Figuring out which is which is far more productive than screaming about the headline.
The Bottom Line
The West Marin project is designed to create 54 affordable rental units in a community with a serious housing shortage.
That's valuable.
But the approximately $55.4 million estimated development cost should also get our attention.
California's housing affordability crisis isn't merely a story about buyers being unable to afford existing homes.
It's also a story about how difficult and expensive it has become to produce new housing.
If we want housing to become more affordable, we need to talk about both sides.
How people pay for homes matters.
But so does what it costs to create them in the first place.
And when an affordable-housing project can approach $1 million in development cost per unit, that's a conversation worth having.
FAQ
Is the Marin affordable-housing project really costing $1 million per home?
The estimated total development cost is approximately $55.4 million for 54 rental units, which works out to roughly $1 million per unit. That is a development-cost calculation—not the purchase price or rent residents will pay.
Where is the project?
It's at the former Coast Guard property near Point Reyes Station in West Marin County.
Why is affordable housing expensive to build?
Costs can include land, construction labor, materials, infrastructure, financing, architecture, engineering, regulatory requirements, site preparation and rehabilitation of existing structures.
Does California still have a housing-affordability problem?
Yes. C.A.R. reported that only 19% of California households could afford the state's median-priced single-family home in Q2 2026.
Why Does Affordable Housing Cost $1 Million Per Unit in California?
A West Marin affordable-housing project is estimated to cost roughly $1 million per unit. Here's what that number really means—and why California housing is so expensive to build.
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