Report: Residential permitting in L.A. continues to nosedive in first quarter of 2025

Continuing a downward trend that began two years ago, the number of new housing permits issued in Los Angeles continued to decline in the first quarter of 2025, according to new analysis from Hilgard Analytics. In the first quarter of 2025, just 1,325 new homes were approved citywide - a 56.8 percent decline from the 3,067 homes that had been approved by this time in 2024.

"The slowdown reflects a combination of persistent structural challenges - elevated interest rates, ongoing economic uncertainty, and a complex regularly environmental - as well as acute disruptions," writes study author Joshua Baum. 

Foremost among those acute disruptions was the Palisades Fire, which destroyed much of Pacific Palisades in early January. Although rebuilding permits began moving forward in March, the change in priorities to the fire-damaged community has absorbed significant city resources, even relegating the long-planned expansion of the Los Angeles Convention Center on the back burner. Likewise, Baum points to changing federal policies as a complicating factor for many builders, with tariffs spiking the cost of construction materials and immigration restrictions shrinking the pool of labor. Finally, the transfer tax imposed by Measure ULA continues to impact housing development. A report recently published by researchers with UCLA and the RAND Corporation concluded that Los Angeles has wound up with less new affordable housing as a result of the tax, which applies to all sales of properties valued at $5 million or more.

Conversely, some local legislation has the potential to move the needle, such as the new Citywide Housing Incentive Program recently adopted by the City Council. The power of those incentives can be seen in plans for a high-rise at 1050 S. La Cienega Boulevard, where Carmel Partners has used the new rules to retool an earlier plan for a 24-story, 290-unit apartment tower into a larger 43-story building with 532 homes.

Baum also points to several pieces of state legislation which could spur new developments, including AB 698, which would require cities to analyze potential impacts on affordable housing production before adopting new transfer taxes. Other pieces of legislation would streamline environmental review for infill housing, encourage density in areas near transit, and provide up to $10 billion statewide for housing programs.

Housing permitting has always varied across the city, with hotspots seeing flurries of new construction while other areas remain unchanged for decades. However, in the first quarter of 2025, only four out of the fifteen Los Angeles City Council Districts saw the approval of more than 100 new homes (Council Districts 9 and 10 in South Los Angeles, Council District 11 on the Westside, and Council District 14 representing Downtown and much of the Eastside). Year-over-year declines were particularly steep Council Districts 3 and 7, both of which represent parts of the San Fernando Valley and saw more than 90 percent drop-offs from 2024.

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