Analysis: Residential permitting down 18.9% in Los Angeles in first half of 2024

Residential permitting continues to fall in the City of Los Angeles, according to a new study released by Hilgard Analytics and Zenith Economics.

"Throughout the City of Los Angeles, 5,208 residential units were permitted through the first half of 2024," writes Joshua Baum of Hilgard Analytics and Samuel Maury-Holmes of Zenith Economics. "This represents a fall of 18.9%, or 1,216 units in absolute terms, relative to the same time period last year."

The steep drop-off in the first half of 2024 compounds decreases seen in 2023, when Hilgard found that the number of housing permits issued was down 5.3% relative to the previous year.

The study also dove into the number of housing units developed using the Mayor's Executive Directive 1 (ED1), which expedites the approval of 100 percent affordable housing projects, and has accounted for much of the city's residential development pipeline over the past two years. The authors found that while more than 10,000 residential units have been approved using ED1, just 588 units have been permitted citywide in the first half of 2024. Still, that is an increase over the 84 ED1 units permitted in the first half of 2023, when the executive directive was still new, and the number of projects is still expected to grow.

The study "identified 25 projects that received ED1 approval and have also received permits for demolitions or grading, which are often intermediate steps taken before the final construction permit, alongside many more ED1 eligible projects which are still going through the approval and permitting processes."

Performances also varied between Council districts and different regions of the city. The sharpest drop-offs were seen in Council Districts 1, 4, 10, 13, and 15, while Council Districts 3, 6, 7, and 12 in the San Fernando Valley all saw upticks.

Unlike in November 2023, when the study cautioned that the slowdown in housing construction may be a temporary state of affairs, the authors are less optimistic in 2024.

"The continued fall in citywide permitting is somewhat unexpected as interest rates have leveled off, local employment numbers have continued to climb, and it was theorized that developers might adjust to Measure ULA by now. Even if the pace of residential permitting were to improve going forward, the shortage of deed-restricted affordable housing, historic redlining, and other exclusionary policies will keep L.A,’s housing and homelessness challenges acute for an extended period."

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