Everyone agrees that delays and uncertainty are costly for housing development. But it’s very hard to put a number on it. The obvious costs (lawyer hours, interest over many months) are surely an underestimate. Professors Stuart Gabriel and Edward Kung have a useful answer, at least for Los Angeles:
As a lower bound, simply by pulling forward in time the completion of already started projects, we estimate that reductions of 25% in approval time duration and uncertainty would increase the rate of housing production by 11.9%. If we also account for the role of approval times in incentivizing new development, we estimate that the 25% reduction in approval time would increase the rate of housing production by a full 33.0%.
Delay and uncertainty go together for two reasons. One is that many delays are caused by uncertain processes, like public hearings and discretionary negotiations. The other is that market conditions change, so a developer chasing a hot market in Los Angeles is probably too late – by the time she’s leasing up, the market will have changed.
