The construction of housing in Los Angeles plunged during the first quarter of 2025, according to a new report, a decline which could ultimately worsen the city's affordability crisis.
The developers drawn permits for 1,325 new houses in the city of the first three months of 2025, down almost 57% compared to the same period a year earlier.
In a report published on Tuesday, the research firm Hilgard Analytics blamed the sharp drop in various factors that have made more difficult for developers to make a profit, including high interest rates, price and economic uncertainty, as well as the tax measure of transfer from the Ula city.
The director of Hilgard, Joshua Baum, said that January forest fires have probably also played a role in causing generalized commercial disturbances.
Lases in the first quarter were reported in most regions of the city, but the most steep bumps were in the districts of the Council which cover the western and northeast parts of the San Fernando valley, as well as South Los Angeles.
Although the impact of fire could be temporary, the construction of housing had dropped before January, with city permits of 23% in 2024 from 2023, according to Hilgard which analyzes the data of the Department of Los Angeles of Construction and Security which includes permits for the new unifamilial and multifamilial buildings, but not adus.
A sustained withdrawal in the development of housing could have major implications for a city plagued by an affordability and a budgetary crisis.
In general, economists say that construction more houses reduces upward pressure Price and rents of housesAnd new development also tends to increase tax revenue.
Monday, the mayor of Los Angeles Karen Bass Announced plans To eliminate more than 2,700 city posts to help close a budget hole of nearly a billion dollars.
“If we do not build now, from the long -term perspective, this indicates higher prices and higher rents at some point in the future,” said Christopher Thornberg, founding partner of Consultancy Beacon Economics.
A drop in development is not unique to the city.
Housing developers have started less projects on a national scale, as they deal with high interest rates and the more recent prices.
Some developers say that Measure Ula, a new tax of Los Angeles City on sales of large properties, has aggravated the environment in Los Angeles – compared to the rest of the county and the nation – and caused death even more projects.
Hilgard Analytics did not examine the construction of housing outside the city in its report.
However, a recent analysis of researchers to UCLA and the RAND CORP. The construction of estimated housing probably falls more in the city than elsewhere in the county of the, citing a stronger reduction in properties of properties where developers tend to build multifamilial housing.
