The High Cost of Getting Permission to Build
Concrete Evidence (March 9, 2026)
It’s hard to build new housing in Los Angeles County, which includes its namesake city and more than 80 others nearby. A new working paper from economists Evan Soltas and Jonathan Gruber measures just how hard, using some interesting methods to isolate the cost of getting a building permit.
In L.A., people who own land that can be developed—such as undeveloped lots and likely teardowns—can either sell it as-is, or secure the permits needed for a project first. Interestingly, some investors have even specialized in acquiring land, getting the permits to develop it, and then selling it.
That creates some useful data. When the same lot is listed for sale twice before the building project begins—first with no permit and then with one “ready-to-issue”—the price increase can tell you how much buyers are willing to pay to avoid the permitting process. Use AI to extract information from real-estate listings, sprinkle on some fancy econometrics to calculate the price changes, and you’ve got a pretty neat—and informative—academic paper.
It turns out buyers are willing to pay quite a lot: “permit approval raises the price of vacant land by 50 percent on average,” the authors find. That premium comes to $48 per square foot, or a third of the difference between construction costs and housing prices.
The authors also do a more traditional analysis, where they simply estimate how much more valuable lots with permits are relative to other lots with similar characteristics. This research design is less strong because there may be important characteristics not measured in their data, but it yields similar results.
Beyond the raw numbers, the study paints a bleak picture of the broader economic costs of permitting—i.e., getting permission to build, a process that can involve both objective and discretionary decisions from numerous regulators—and the toll it takes on L.A. real estate. It takes over four years to build a mid-sized apartment building in Los Angeles County, the authors estimate—about twice as long as it would take in Raleigh or Fort Worth.
In L.A., getting a permit accounts for 40 percent of the total time of building, which appears to be a significant reason buyers are willing to pay to skip that step. Projects that start with a permit already in hand “are 8 to 12 percentage points more likely to be completed within four years of site acquisition, relative to a counterfactual four-year completion rate of 35 percent,” Soltas and Gruber write.
The authors’ approach isn’t the only way to measure the costs imposed by housing regulations—see here for another. But it’s a particularly clean and straightforward one. This paper is sure to become a common citation in the abundance and YIMBY debates going forward.
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