Over 15,000 new units were permitted last year in Los Angeles, the overwhelming majority market-rate. That seems like evidence that new construction pencils in many places as long as zoning is accommodative, even with current hard costs and interest rates. :-)
Multifamily permitting in LA cratered last year. New construction is not pencilling. Most of the units you are talking about are ADUs.
LA reported to the Census that roughly half of the units permitted were in 5+-unit buildings. ADUs were not the majority. housingdata.app/places/CA/Lo...
I was referring to the market rate units. The larger point is that folks aren't building multifamily here. The 2025 numbers will likely be even worse.
In the first half of 2025, 3,141 units were permitted (excluding ADUs), 2,679 of them in multifamily buildings. So projected out, that would be 5,358 units in multifamily for 2025, a 58% decrease compared with 2018. For Q1 2025, 56% of multifamily buildings permitted were 100% affordable
Dislike! (the 58% decrease)
Permitted = building permits issued, construction may begin? Or applied for? Or something pre-building permit (some kind of entitlement thing that as a New Yorker I am not smart enough to understand)?
Building permit issued so construction may begin
oh pul leaze, us New Yawkers are plenty smarts
Somebody said half the multifam units are market-rate elsewhere in the thread. You are making too categorical of a statement by saying units don’t pencil. Production is down, but if thousands of market-rate units penciling anywhere, it is evidence that more would pencil with zoning changes.
We will see. I hope you are right but am quite worried. Over 35,000 units were proposed through ED 1, but I believe less than 10% have actually pulled permits. (Am I remembering correctly, @cohenhouse.bsky.social?)
And by making overly categorical statements like this that do not account for the nuance that there is still some protection even under tough zoning – “folks aren’t building multifamily,” “units don’t pencil” – you are playing into arguments against upzoning.
I’ve gone round and round and round with people about this, but without running the numbers at all it strikes me as obvious that if real estate prices are inflated because of artificial barriers that there will be a ton of projects that will pencil if those barriers are removed, regardless of rates.
You'd be surprised at how many developers in LA build projects that don't pencil. Also, of the 7,919 multifamily units permitted in LA in 2024, 49% were deed-restricted, so "overwhelming majority market-rate" is not an accurate statement
It pencils in their heart and mind…whatever, the units will mostly get built.
I offered to buy a vacant lot for 60k. Owner said 175k contingent on variances. Or 125k for immediate cash close. At 175k, my net profit would be $0. Everyone selling land in Long Island assumes house prices will go up 10% again next year and thats where the builder's profit should come from.
And it is the overwhelming majority of units, because that was only about half the units permitted – there was a roughly similar amount of single-family, very small multi, and ADUs, which are ~100% market
But the entire context of this discussion is multifamily buildings. No one is claiming that ADUs aren’t penciling.
ADUs sadly don't pencil anymore in Denver
Building permits?
