Another gem from the recently released report on expensive housing in California: density means lower prices. Again, this isn’t a shock to many of us, but growth resisters have made density and supply dirty words. They aren’t, and in fact the report from California’s independent and non-partisian Legislative Analyst’s Office building more housing and dense housing is part of the answer to lowering prices. Here’s why:

High Land Costs Can Be Offset Through Dense Development. Although high land costs can translate into higher home prices and rents, it is possible to offset the effects of high land costs through more dense development. (The density of housing refers to the number of housing units per unit of land—typically measured in units per acre. Higher- density housing, such as an apartment building, has more housing units per acre.) Building more units on the same plot of land allows a developer to spread land costs across more units, lessening the impact of land costs on the cost of each unit. This is because land costs are fixed and do not increase if a developer builds additional units. For example, if a developer builds five homes on a plot of land that costs $100,000, the land cost per unit is $20,000. Alternatively, if the developer builds ten homes on the same plot of land, the land cost per unit is only $10,000. Builders faced with high land costs, therefore, generally will build more dense housing. When this occurs, the effect of high land costs on home prices and rents is reduced.

This is why microhousing worked so well; more, smaller units mean cost sharing between renters and lower prices for the same land, construction, and financing costs. It’s like 20 people going to dinner and splitting the bill for the same amount of food instead of 10 people paying for the same dinner; more people means smaller portions but spending less money. It’s that simple. But what makes doing this impossible? Neighborhood opposition, of course.

Community Decisions Can Exacerbate Land Scarcity. City and county land use policies can alleviate pressures created by limited vacant land by encouraging redevelopment and allowing developers to build more housing on each parcel. In many California communities, however, for reasons discussed earlier the opposite is true. Zoning laws often require developers to build housing at densities that are common elsewhere in the community, preventing developers from building at higher densities to counter high land costs. In addition, local communities sometimes pressure developers to reduce a project’s planned density during approval processes. Cities and counties also can magnify the effect of scarce land on housing costs by choosing to allocate a large share of available land to nonhousing uses, such as retail and hotel development.

How long will it take for local officials to get the message from California, a state struggling with the highest housing costs in the nation? I don’t know, but the LAO report is a clear call to allow more housing. Will we heed the warning before we catch up with California?