Apr

18

How Costly Is Permitting in Housing Development?
Evan Soltas, Jonathan Gruber
February 2026

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 pre-approved 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 pre-approved land. Comparing similar proposed developments, pre-approval 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.


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