Trending

LA housing construction plunges 57% in 2025  

Analysis finds interest rates, Measure ULA impede new building starts

Housing Construction in LA Falls 57% So Far in 2025
Listen to this article
00:00
1x

Key Points

AI Generated.
This summary is reviewed by TRD Staff.
  • A significant drop in housing permits issued, attributed to factors such as high interest rates, economic uncertainty, new tariffs, and Measure ULA.
  • The decline is impacting various regions of Los Angeles, with specific areas like the San Fernando Valley and South Los Angeles being particularly affected.
  • The reduced construction could worsen the city's housing affordability crisis and impact the city's budget due to decreased tax revenue.

Housing construction in Los Angeles turned sharply negative in the first quarter of 2025.

Officials issued only 1,325 housing permits in the quarter — a 57 percent drop compared to the same period in 2024, according to a Los Angeles Times article based on a report by Hilgard Analytics. An analysis by Hilgard found the downturn resulted from multiple challenges facing developers, including high interest rates, economic uncertainty, new tariffs and the city’s controversial Measure ULA, a tax on large property sales. 

The January wildfires, which caused widespread disruptions, were also cited as a contributing factor, though their impact is likely temporary.

The decline was widespread, but most pronounced in the west and northeast San Fernando Valley and south Los Angeles. Notably, this trend predates the wildfires, as housing permits had already fallen 23 percent in 2024 compared to 2023. Hilgard’s data, drawn from the Los Angeles Department of Building & Safety, covers new single-family and multifamily units but excludes accessory dwelling units, or ADUs.

The continued drop in housing development could worsen Los Angeles’ already critical housing affordability crisis. Economists stress that building more homes is essential to curbing rising prices and rents. 

Sign Up for the undefined Newsletter

“If we aren’t building now, from a long-run perspective, that says higher prices and higher rents at some point in time in the future,” Christopher Thornberg, founding partner of research data firm Beacon Economics, told the Times.

Reduced construction also affects the city’s budget, as development typically increases tax revenues. This comes at a time when the city is grappling with a nearly $1 billion deficit.

A separate report this month indicated permitting for new multifamily projects in the city fell 18 percent in the first year since Measure ULA was enacted two years ago, resulting in 1,910 fewer apartments in projects of 20 or more units.

And, another report found sales of apartment buildings, office towers and industrial properties across the city of Los Angeles declined by as much as 50 percent since the tax, but that sales in neighboring cities remained relatively stable.

Read more

Residential
Los Angeles
LA multifamily permitting falls 18% after Measure ULA
Politics
Los Angeles
Bass says she wants to pause Measure ULA. Is she allowed?
Politics
Los Angeles
Measure ULA suppresses sales, costs LA $25M in tax revenue
Recommended For You