LA apartment builders pull back as bureaucracy, taxes take toll
By Kerry Jackson | November 25, 2025
Los Angeles needs more apartments. No one will argue otherwise. Developers want to build more units to meet the demand. It’s what they do. But not in Los Angeles. A third party that should play the role of facilitator that allows supply to meet demand is instead an obstructionist.
Los Angeles hasn’t been a builders’ paradise in decades. But in the somewhat recent past, there was some activity. Now, according to an October Los Angeles Times article, “Almost no one is building new apartments in Los Angeles.”
Citing numbers from real estate data provider CoStar, the Times reported that fewer than 19,000 apartment units were under construction in the third quarter of 2025. That’s a 30% crash from three years earlier.
It turns out that “institutional investors are pulling money from” Los Angeles real estate projects and moving their capital instead to “other cities with more predictable development rules and profits.”
The city’s own housing assessment found that between 2021 and 2029, Los Angeles would need to build 486,643 new units. At the current construction pace, that number is unreachable. The city approved 6,618 units in 2021, 6,537 in 2022, 5,732 in 2023 and roughly 4,000 last year. So only about another 463,000 to go.
As recently as 2018, there were more than 8,000 units approved. Ari Kahan, a principal at California Landmark Group, told the Times that at any given time his company would have multiple projects going in the city with as many as 800 units under construction. But, the Times reports, “no more.”
“We haven’t bought a site with the intention to develop it in over two years,” he said. “I don’t know when we will be building in L.A next.”
Los Angeles could be a cash-printing enterprise for developers, but the city’s regulatory framework and its knotted bureaucracy are a fright.
For instance, there’s the United to House Los Angeles Tax, which Kahan calls a “self-inflicted wound.” Also known as the “mansion tax,” Measure ULA assesses a 4% duty on homes or commercial properties valued at more than $5.3 million, and 5.5% on those valued at more than $10.6 million. It has been in effect since April 2023, having been approved by voters the previous fall. The construction downturn arriving at roughly the same time the tax was imposed cannot be brushed aside as a coincidence.
It’s “one of the steepest such levies in the nation,” says research organization RAND, so of course avoidance is inevitable, and “the easiest way” to do that “is to not sell.”
VRAND’s research found that over the first two years the tax, “high-value property sales in the city fell by about 50% — a far steeper decline than elsewhere in the county during the same period.” The collapse in sales naturally “slowed the production of market-rate apartments.”
Sluggish permitting and approval has long been a hallmark of homebuilding in Los Angeles. Thirty years ago the Los Angeles Times reported the results of a study from the group Progress LA that found the city took “up to 16 times as long as other cities in the region to process building permits and charges up to 22 times more in fees more in fees to do so.”
It found Los Angeles to be “by far” more “costly, time-consuming and hostile to its customers” than Anaheim, Burbank, Long Beach, Las Vegas and Phoenix, cities that were competing with Los Angeles to attract employers.
Steve Soboroff, then president of the city’s Recreation and Parks Commission and co-chairman of the coalition that ordered the study, called the findings “a stinging statistical and analytical indictment of a bureaucracy that quite literally chases jobs and tax revenue beyond the city limits.”
Of course apartments aren’t the only homes that are hard to build in Los Angeles due to bureaucratic inertia. Despite the launch of a “One-Stop Rebuilding Center” for “cutting red tape” and rebuilding homes destroyed by the winter 2025 wildfires “as fast as possible,” the permitting process drags on. By mid-November, of the 2,265 building applications submitted to rebuild lost homes within the city limits, only 793 had been approved, according to the state.
A September Bloomberg story that recounted the difficulties of homeowners who were lamenting California’s slow post-wildfire rebuild cited “an agonizingly slow permit process,” and found “many homeowners” who said they didn’t feel there’s enough urgency among officials to move things along.
It’s as if a resistance to homebuilding has been institutionalized in Los Angeles. Bureaucrats see themselves not as enablers but bulwarks against progress.
