Real estate development requires a few solid investments way before any return: money, time, skill, and the ability to tolerate risk. Lots of risk: the economy can (and does) change during the long development process, interest rates go up and down, and city planners throw wrenches into the machinery whenever they can.
So the person who decides to build new real estate has to be smart and experienced, have a lot of money available, two years of time and attention, and mental toughness. Does he build apartments?
No, because the effort isn't worth it, at this time.
Rents are about as high as people can afford. I'm not very political, but the spread between income classes has left most people living on about the same as many years in the past. Rich people are getting richer, but not working people. I found this illustration of information from the Congressional Budget Office:
You can find the image above at http://www.facethefactsusa.org/facts/income-gap-between-rich-middle-class-and-poor-widens.
In other words, over almost thirty years, in constant dollars, 80% of households in the U.S. increased their after-tax income by only 18% to 40%. Cost of living went up, gasoline went up, rents went up, but available income to most households didn't, very much.
Again, I'm not being political. However, I wouldn't tell investors that rents in average California apartments are poised to increase much, because people just can't afford it.
This also explains why, in Coachella Valley, the hot commercial real estate sectors are single family home building (over $600,000), and hospitality. The well-off are driving real estate development, because they have the discretionary spending available.
More on the financial analysis of apartment development in the next chapter.
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