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How Costly Is Permitting in Housing Development?

Author

Listed:
  • Evan Soltas

    (Princeton University)

  • Jonathan Gruber

    (M.I.T.)

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.

Suggested Citation

  • Evan Soltas & Jonathan Gruber, 2026. "How Costly Is Permitting in Housing Development?," Working Papers 352, Princeton University, Department of Economics, Center for Economic Policy Studies..
    • Handle: RePEc:pri:cepsud:352
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    File URL: https://gceps.princeton.edu/wp-content/uploads/2026/07/wp352_Soltas-Gruber_PermittingHousing.pdf
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    JEL classification:

    • K25 - Law and Economics - - Regulation and Business Law - - - Real Estate Law
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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