How Costly Is Permitting in Housing Development?

Evan Soltas and Jonathan Gruber
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Evan Soltas: Princeton University
Jonathan Gruber: M.I.T.

Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: Permitting costs are widely cited, but little analyzed, as a key burden on housing development in leading U.S. cities. We measure them using an implicit market for “ready-to-issue†permits in Los Angeles, where landowners can prepay permitting costs and sell preapproved land to developers at a premium. Using a repeat-listing difference-in-differences estimator, we find developers pay 50 percent more ($48 per square foot) for preapproved land. Comparing similar proposed developments, preapproval raises the probability of completing construction within four years of site acquisition by 10 percentage points (30 percent). Permitting can explain one third of the gap in Los Angeles between home prices and construction costs.

Keywords: Los Angeles; California; building permit; land-use regulation; hedonic; zoning; capitalization (search for similar items in EconPapers)
JEL-codes: K25 R38 R52 (search for similar items in EconPapers)
Date: 2026-02
New Economics Papers: this item is included in nep-hre and nep-uep
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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:352

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