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 office Hilgard Analytics blamed the sharp drop in various factors that have made more difficult for developers to make a profit, including high interest rates, prices and economic uncertainty, as well as the tax measurement of 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 declines were in the council districts which cover the western and northeast parts of the San Fernando valley, as well as South Angeles.
Although the impact of fire could be temporary, the construction of housing had dropped before January, with permits on the city scale of 23% in 2024 from 2023, according to Hilgard, which analyzes the data of the Los Angeles construction and security department which includes permits for 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 the construction of additional houses reduces upward pressure on prices and rents for houses, and that new development also tends to increase tax revenue.
Monday, the mayor of Los Angeles, Karen Bass, announced his intention to eliminate more than 2,700 city positions 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 UCLA and Rand Corp researchers. The construction of estimated housing probably falls more in the city than elsewhere in the County of Los Angeles, citing a stronger reduction in properties of properties where developers tend to build multifamilial housing.
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