If You Can't Build It, You Lose It.

Welcome to the Skeptical Investor blog right here on BP! A frank, hopefully insightful, dive into real estate and financial markets. From one real estate investor to another.

Today's Read Time: 15 minutes (totally worth it, we go deep!)

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This week, we're talkin' one thing: how hard is it to build housing? And why/how the answer is different in Nashville than in Seattle, and what are the second and third order effects on housing and rent prices?

Let's get into it.

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Today's Interest Rate: 7.12%

(☝️ .23% from this time last week, 30-yr mortgage)

Mortgage rates crossed back above 7 percent on Thursday for the first time since May 2025, after an inflation report that ran hotter than expected, and the Federal Reserve meets Tuesday and Wednesday with a potential rate increase on the table. There is more in the news below; my own view remains that they hold.

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The Weekly 3 in News:

1. -Interest rate week! The Fed decides Wednesday, Sept 16, with a fresh dot plot, and futures markets are pricing roughly an 80% chance of a quarter-point hike. The setup: August CPI rose 0.4% on the month and 3.4% over the year, with gasoline up 27.4% from a year ago and responsible for more than a third of the monthly increase. Core inflation (ex food and energy) ran a tamer 2.4%, and shelter cooled to 3.0%. Wholesale prices were hotter: PPI hit 5.4%, the highest reading of the year, with diesel up 24.1% in August. (BLS CPI, Sept 11; CNBC on PPI, Sept 10; CME FedWatch) Strip out energy and the Fed is near its target. But they don't get to strip out energy when diesel is up 24%, and no rate hike reopens a shipping lane. I still don't think they cut this year, but it's not looking good.
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3. -Houthi forces seized a Red Sea port 46 miles from the Bab el-Mandeb strait.Iran-backed Houthi fighters took Yemen's port of Mokha on Thursday after overnight clashes, then Perim Island the next day, tightening their grip on a chokepoint for Suez-bound oil. Crude closed the week above $100 a barrel for the first time since mid-May, and U.S. retail diesel topped $6 a gallon for the first time ever. (NPR, Sept 11; CNBC; Cornerstone Futures)
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5. -The European Central Bank raised rates for the second time since the Iran war began. The ECB lifted its deposit rate a quarter-point to 2.50% on Sept 10, a unanimous decision President Lagarde called "a no brainer." The bank now sees euro-area inflation averaging 3% in 2026 and 2.5% in 2027. (CNBC, Sept 10; Bloomberg)

Fun Things Happening in Nashville This Week:

• AMERICANA FEST takes over the city Tuesday through Saturday, Sept 15–19.More than 200 artists play nearly 300 events across some fifty venues. Runs $150, though a good many of the daytime events are free. This is the week the songwriters outnumber the tourists. (Americana Music Association)
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• -Nashville Scene Margarita Festival, Saturday, Sept 19. The Scene's annual tequila-and-tacos afternoon. Go early, the good stuff runs out. (Nashville Scene)

Build Housing? You Need Permission

My great grandfather built a home in the Lake Tahoe, California area to be his summer and winter cabin for skiing and fishing. It's lovely, I've been able to go a few times, even though his kids sold it many decades later (the ultimate story of 'we shouldn't have sold that property!'). Thankfully the owners are welcoming and generous.

When he was mapping out his build site, did he need to go in front of the city council and present his setback plan and prove to them he was constructing a building that was "safe?" That his floor joist spanning was adequately spaced? That his roof was laid well to keep out the moisture?

Hell no.

And, guess what? It's still standing today.

But today…you need permission to build a home in America.

Now, you can debate whether or not that should even be a thing (I think permitting for single-family homes is unnecessary/wasteful/costly), but that's an argument for another day.

Unfortunately, the largest delta within America is amongst the cities and states that impose burdensome regulatory building policy. So much so it is a root cause of the high home and rental costs we are experiencing today.

Let's examine the stark differences.

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Don't Put Builders in a Corner. Let Us Build Baby.

For most of the last decade, the argument over why housing costs what it does in America has been conducted with remarkably little information about the one variable that every builder complains about most: the wait.

Interest rates are published daily. Lumber is quoted by the board foot. Land trades in public. But the length of time between the day a developer asks a city for permission to build and the day the city says yes has never really been measured across the country in any consistent way, and so it has been possible, for a very long time, to argue about housing supply without ever discussing the counter where supply is actually rationed.

Well, now we know.

A Tale of Two Americas

A new study out of the University of Chicago and Princeton timed 1.1 million building permits in 60 cities over 25 years, and what it found is that builders in some cities in America can finish a building in the time other cities take just to permit one.

Permission is why the rent and the price are so damn high.

My point of view, as someone who owns and operates in one of the fast cities, is that this study is the most useful piece of housing research I have read this year. Why? It's a map. This study tells you which kind of market you are in, which kind of risk you are carrying, and, if you own in Nashville for instance, exactly what your advantage is.

In the time it takes the City of San Francisco to approve a modest apartment building, a developer in Raleigh, North Carolina, can apply for the same permit, receive it, put up the building, and hand the keys to tenants. That is the central finding of a new study by three economists, Leonardo D'Amico of the University of Chicago's Booth School of Business and Evan Soltas and Audrey Wang of Princeton University, who set out to measure something that, for all the years of argument over the cost of housing in America, no one had systematically measured before: how long does it take to get permission to build? (D'Amico, Soltas & Wang, "Where Is Housing Slow to Build, And Is It Getting Slower?", September 2026)

To answer the question, the authors assembled records for 1.1 million building permits filed in 60 American cities between 2000 and 2025, roughly one of every thirteen housing units permitted in the country over that period. The records came from municipal open-data sites where those existed, from the online portals that cities maintain for developers where they did not, and from public-records requests where cities declined to post the information at all. From each permit the researchers recorded three dates: the day the application was submitted, the day the permit was issued, and the day the finished building received its certificate of occupancy, which is the document that allows someone to legally move in.

Because a luxury tower and a garage apartment are not comparable, the authors built their comparison around two standardized projects: a detached 2,800-square-foot house constructed as infill on a 0.15-acre lot, and a 20-unit apartment building with 1,200 square feet per unit, each placed in a neighborhood of median income and median density for that type of construction. They then estimated, city by city, how long each project would wait for approval and how long it would take to be completed, adjusting for the mix of projects actually proposed and for projects that had not yet finished.

The results describe two different societies.

In Los Angeles, New York and San Francisco, the standardized 20-unit building requires an average of 4.6 years from application to occupancy. In Raleigh, Orlando and Phoenix, it requires about two. The single-family house takes roughly a year in the Sun Belt and two and a half years on the coasts. Between the slowest cities and the fastest, the gap in total project time approaches three years, and the authors attribute between 30% and 43% of that gap not to the pace of construction but to the time a project spends waiting for the city's permission. As they put it, the fastest cities complete a project in the time the slowest cities take to merely approve it.

Source: D'Amico, Soltas & Wang (Sept 2026), Figure 1(b). Standardized 20-unit building, 2015–19 applications. Values read from the published figure (approx.).

The dotted line on that chart marks the moment, 1.5 years after applying, at which Raleigh's building is finished, leased and collecting rent. At that same moment, San Francisco has not yet issued the permit.

What is striking is not the names on the list, which anyone who has tried to build on either coast could have guessed, but the starkness of the division.

The slow group is coastal, politically blue and expensive, without a single exception: San Francisco at 4.8 years, Miami at 4.7, New York at 4.6, Oakland at 4.5, Los Angeles at 4.2, Boston at 3.7.

The fast group is the Sun Belt and the industrial Midwest: Raleigh at 1.5 years, Indianapolis at 1.7, Columbus at 1.8, Jacksonville and Fort Worth at 1.9, Atlanta at 2.0.

The consequence for production shows up plainly in the raw permit counts. San Francisco issues 1.1 new-housing permits per 10,000 residents a year, New York 2.6 and Los Angeles 4.1, while Raleigh issues 41.9 and Durham 62. Nashville, at 38.2, ranks seventh-highest of the 60, a figure we will return to.

Two cities that break the pattern are worth a mention: Charleston, South Carolina, is slow to permit, taking about 1.7 years to approve the standardized building under the weight of its historic-district review, but fast to build once it has the paper in hand. Baton Rouge is the reverse: a quick permit followed by a slow build, four years in all. The paper separates the two clocks for this reason, and an investor underwriting a market should separate them too.

Key Takeaway: Construction takes roughly the same time everywhere. Permission does not, and permission is what separates a two-year project from a five-year one.

The Rent Effect

It is tempting to assume that the coasts are expensive because of the ocean, the weather and the jobs, and that the permit counter is a symptom of that desirability rather than a cause of the prices. The permit data suggest the counter carries a great deal of weight on its own.

Across the 60 cities, each additional year of apartment permitting time is associated with 39% higher median rent, and the length of the permitting process by itself explains 51% of the variation in rents from one city to the next. For home prices the relationship is tighter still, with an R-squared of 0.65 for readers who keep score that way. The finding survives the obvious objections. When the authors control for population density, for household income and for the share of adults with a college degree, the relationship between permitting time and rent remains significant at the 1% level. Importantly, the lazy explanation, that expensive cities permit slowly simply because they are dense and rich, was tested and found insufficient.

Source: D'Amico, Soltas & Wang (Sept 2026), Table 2. Unadjusted means for completed projects; Nashville coverage 2016–25.

On the supply side, each additional year of permitting delay is associated with 3.8 fewer new homes per 10,000 residents per year. To put that figure in proportion, the average city in the sample permits roughly that many homes per 10,000 residents in total, which means that a single year of delay is worth approximately one city's entire annual output.

The Wharton Index should be eliminated.

For fifteen years, the standard way to measure how hard a city makes it to build has been the Wharton index, which arrives at its score by surveying thousands of planning officials by hand every few years. It is slow, it is expensive, and we have tech tools for this now. What this paper shows is that a much cruder number does the job about as well: count the days between the application and the approval. That's the whole ballgame.

Every city in America already has that number. Nashville has it. Los Angeles has it. Hardly any of them publish it. Any city that wanted to could post its median permitting time on a public dashboard next quarter, refresh it every ninety days, and do it for about the cost of a summer intern.

I hope every city council member in America reads this.

Size Matters

The size of the effect is itself a clue to what is happening. If slow permitting mattered only because a developer's capital sits idle while the application is reviewed, a one-year delay should raise rents by roughly the cost of carrying the project for a year, something on the order of 8%. The actual slope is 39%, about five times that figure. The delay, in other words, is doing more than tying up money. It is "rationing." Every year added to the process quietly eliminates a slice of projects that would otherwise have penciled, and the projects that survive open into a market with less competition than they would otherwise have faced.

The authors have a sharper way of making the point. In the 40 cities where they could observe every application rather than only the approvals, the applications that never received a permit sat for an average of 2.6 years, in the case of apartments, and 3.2 years, in the case of houses, before their last recorded status. Those are the projects that lost. The headline durations describe only the projects that won. And in a third of the cities in the sample the losing applications are not in the data at all, because those cities publish only the permits they issued. Every coastal figure in this paper should therefore be read as a floor.

Key Takeaway: Take two cities that are otherwise alike and have one of them spend a single year longer approving the same apartment building. Rents in the slower city run about 39% higher. On a $1,000 apartment that is nearly $400 a month, every month, and it appears on no invoice anywhere. The tenant pays it. The owner who bought before the rules tightened collects it. And the reason it exists at all is the building that never got proposed, by a developer who ran the numbers, saw the wait, and walked away.

Slower Every Year Since 2000, and Not Because of COVID

The permit time counter is getting slower, in every region.

This is ALARMING.

After adjusting for the kinds of projects proposed in each year, since larger buildings take longer, and for projects that had not yet finished when the data were collected, the expected wait for an apartment permit rose from 0.6 years in 2000 to 1.5 years in 2023. The wait for a single-family permit tripled over the same period, from 1.6 months to 4.9. Expressed as odds, which I find lands harder, the standardized apartment project had a 71% chance of approval within six months of applying in 2000; by 2025 that chance had fallen to 44%. For the house, the probability of approval within two months fell from 88% to 70%.

Source: D'Amico, Soltas & Wang (Sept 2026), Figure 3, censoring-adjusted series. Values digitized from the published figure (approx.).

Two features of that chart deserve attention.

The slowdown predates the pandemic by two decades. The line begins climbing in the early 2000s and never turns down; COVID made it worse, but COVID is not the cause. Something structural has been added to the process, one review layer at a time, for a quarter of a century.

Total project time, unlike permitting time, moves with the business cycle. Construction speeds up and slows down as builders respond to demand. Permitting simply climbs. Only one clock answers to the market, and the other answers to nothing.

Source: D'Amico, Soltas & Wang (Sept 2026), Section 3.

Are Cities REALLY "Overwhelmed?"

The customary defense of a slow city is that its permit office is overwhelmed, with too many applications and too few reviewers. The authors tested that defense directly. In the cities hit hardest by the Great Recession, permit volumes collapsed while permit durations barely moved. If slow permitting were a matter of congestion, the queue would have cleared when applications fell by half. It did not.

Slow is a policy, not a backlog.

This connects to an argument I have been making all summer. Apartment starts have collapsed, and I wrote in July and again in August that 2027 and 2028 are shaping up as thin delivery years. This paper adds a second multiplier that I had not fully priced: whatever does get started now arrives later than it would have a decade ago, because the permit sits longer. There are fewer starts, and each one takes longer to become keys. Jay Parsons, the housing economist, put the market's response in a single line on Monday:

"Year-to-date apartment rent growth is at a 4-year high (though still well below normal), aligning with the big drop-off in apartment supply. More evidence that 2026 may be an inflection point for the U.S. multifamily rental market." (Parsons on X, Sept 8)

RealPage reports effective rents up 0.9% from a year ago with occupancy back to 95.5%, the eighth consecutive monthly gain. (RealPage, August update)

Key Takeaway: The housing supply pipeline is not only thinner than it was, it is slower. For an owner of stabilized units, the next wave of competition is further away than the starts data alone would suggest.

Nashville Can Permit a House in Seven Weeks.

Nashville appears in the study by name, and it appears as a fast city, though our larger multifamily clocks in at an average pace.

Over the study period, Metro Nashville/Davidson County permitted 38.2 new housing units per 10,000 residents a year, the seventh-highest rate among the 60 cities, behind only Durham, Sioux Falls, Charleston, Jacksonville, Raleigh and Fort Worth. New York managed 2.6 and San Francisco 1.1.

For projects that were eventually built, the average time from application to permit issuance in Nashville was 0.14 years, or about seven weeks, and the average time from application to certificate of occupancy was 1.11 years. In the paper's chart of fast, high-output cities, the authors label Nashville by name beside Austin.

Set our seven weeks against San Francisco's 1.47 years, Miami's 1.38 and Boston's 1.32, and the difference is on the order of ten to one in the time a builder's capital sits idle before a shovel moves. And the gap between Nashville and San Francisco on the apartment clock is roughly 1.3 years, which at 39% per year accounts for something like half of the rent difference between the two cities, where Nashville's median sits at $1,373. (Apartment List, Nashville, September)

Now the asterisk. Nashville's standardized house clears the process in about 0.9 years from application to keys, placing the city in the fastest third of the sample and among the national leaders. Its standardized 20-unit apartment building, however, comes in at roughly 2.3 years, almost exactly the sample average of 2.4, and behind Raleigh at 1.5, Indianapolis at 1.7, Columbus at 1.8, Jacksonville and Fort Worth at 1.9, and Atlanta at 2.0. The duplex archetype in the paper's appendix ranks Nashville 22nd of 41 cities. We are elite at permitting a house and merely average at permitting a building.

Source: D'Amico, Soltas & Wang (Sept 2026), Figures 1(a) and 1(b). Values read from the published figures (approx.).

This is significant because much of our growth story of the last decade has been apartments, versus homes. Nashville delivered 35,900 apartment units since 2023, including 14,723 in 2024 alone. (Multi-Housing News) I can see them from my office. Developers put up an extraordinary number of institutional-scale buildings here over the last four years, and the skyline is still littered with cranes today, though nowhere near as many as three years ago. I wrote about the East Bank pipeline in June, and it has not slowed much since. My reading of the paper is that Nashville's apartment boom happened because of many factors (like the Zero Interest Rate Policy of the Fed) despite an average approval process, and that the pipeline at Raleigh's speed would have been something to see. Important to note, new apartment supply coming on market peaked mid-2025, and has been cliff diving since. 2027 is likely to bring continued rent increases, as I've written about many times.

Time is Money

The paper measures the cost of permission in time. A Bay Area architect and developer named Matt Baran posted the cost in dollars on X last week, and it may be the most useful chart of the year.

A builder pulling a permit for a single-family home in Los Angeles, with a permit valuation of $848,200, pays $94,787.98 in fees. The building permit itself is $3,607. The remainder consists of surcharges, a $16,371 school-district fee, and one line item that does most of the work: $70,597.60 for the city's affordable housing linkage fee. (Baran on X, Sept 9)

I checked the figure against the city's own ordinance. Los Angeles charges a single-family detached home as much as $23.20 per square foot in its high-market areas, adjusted for inflation each July, and $70,598 at that rate works out to a house of 3,043 square feet, which is exactly what an $848,200 valuation implies. (LA City Planning, AHLF fee schedule)

Rough estimates for the same house elsewhere in California run from $150,000 to more than $300,000 in Palo Alto, $110,000 to $120,000 in Sunnyvale, $35,000 to $55,000 in San Francisco, and $20,000 to $35,000 in Kern County.

How about Nashville?

Metro Codes charges $5.00 per $1,000 of valuation for a residential building permit, plus a plan-review fee equal to 65% of the permit fee, plus separate trade permits for electrical, plumbing and mechanical work. (Metro Codes fee schedule) Applied to Baran's $848,200 house, that produces roughly $4,241 for the permit, $2,757 for plan review, and perhaps $1,000 to $2,000 in trade permits, for a total on the order of $8,000 to $9,000. Los Angeles charges roughly eleven times as much for the same house. (The Nashville figure is my calculation from the published schedule.)

Sources: Matt Baran (X, Sept 1 and 9, 2026; starred figures are his stated estimates); LA City Planning AHLF fee schedule (July 2025); Nashville Metro Codes fee schedule, calculated.

The reason there is no $70,000 line item in Nashville is a matter of state law. In 2018 the Tennessee legislature prohibited local governments from requiring inclusionary or below-market housing as a condition of any permit, variance or rezoning. (SB 0363, 110th General Assembly)

One further detail from the Los Angeles schedule reveals a good deal about how such fees are designed. A building of two to five units pays only $1.28 per square foot across most of the city, while a single house pays between $10 and $23. Whatever the intent, the city taxes a house at 8 to 18 times the rate of a fourplex, and the house is precisely the product a small investor (or homeowner) builds.

Tennessee Is Fast Because It Was Fast

Tennessee issued roughly 52,000 residential permits in 2025, about 24,000 of them in the Nashville area, and has permitted above the national per-capita rate for years, reaching a peak of 8.24 permits per 1,000 residents in 2021. (Innago) We are not the fastest state; Idaho and the Carolinas lead on a per-capita basis. But we sit comfortably within the tier of states that build.

What follows is the part I would underline for my Tennessee readers. This year the General Assembly considered a bill that would have barred cities from restricting accessory dwelling units, the backyard cottages and garage apartments that add housing without changing a neighborhood's footprint, and would have required that ADU permits be approved within 60 days, without a discretionary hearing. It was, in the language now used in statehouses across the country, a shot clock. It died in committee. (Enterprise Community Partners, 2026 session summary; WPLN) In the same season, Florida placed a shot clock on building permits with automatic approval if a city misses its deadline, effective July 1; Georgia enacted a 60-day deadline in May; and Wyoming enacted one of 30 days. (Homes.com on Florida HB 803; National Law Review)

Recall the paper's third finding, that permitting is slowing everywhere, the South included. Seven weeks is a policy outcome, not a law of nature. Tennessee is fast because it was fast, not because it is legislating to remain so, and the day Metro adds a linkage fee or a discretionary review layer is the day Nashville begins its walk toward Charleston, a city that builds quickly and permits slowly and takes 3.3 years to deliver the same 20 units.

Key Takeaway: Any reader who owns Nashville dirt has more riding on the Codes department's budget and next session's housing bills than on anything the Federal Reserve decides on Wednesday. Try harder Tennessee!

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Case Study: The Austin Experiment

Beginning in 2015, Austin loosened its zoning to permit large apartment buildings near jobs and transit. Between 2015 and 2024, the city added 120,000 homes, an increase of 30% in its housing stock and more than three times the national rate of growth. Rents did exactly what your high school economics textbooks say they would. The city's median rent fell from $1,546 in December 2021 to $1,296 by January 2026, 4% below the national median. In buildings of 50 or more units, rents fell 7% in 2024 alone, the steepest decline recorded in any large American metropolitan area, and in the older Class C buildings where lower-income tenants live, they fell 11.4%. (Pew Charitable Trusts, March 2026)

Source: Pew Charitable Trusts, March 18, 2026, citing Census ACS and Zillow.

Austin is also in the permitting study, where the authors label it by name as the fastest-permitting and highest-output large city in the sample. That is not a coincidence.

Home Builders Weigh In

The national accounting of the dollar cost is available as well. In June the National Association of Home Builders updated its long-running study of regulation and found that government at all levels now adds $131,734 to the cost of a new single-family home, 26.4% of the average sale price and an increase of 40% since 2021. (NAHB, June 2026) For apartments, regulation accounts for between 32% and 40% of total development cost. (NAHB/NMHC)

The permitting paper explains the time; the NAHB explains the money; between them they constitute the full invoice. The backdrop to both is a calculation published last year by Edward Glaeser and Joseph Gyourko, who found that had the nation's housing stock grown between 2000 and 2020 at the rate it grew between 1980 and 2000, the country would have 15 million more homes than it does. The old building superstars, Atlanta, Dallas, Phoenix and Miami, have slowed and converged toward the coasts. In their phrase, "the suburban frontier appears to be closing." (Glaeser & Gyourko, NBER 2025)

What This Means for The Investor

Most of the coverage this paper receives will treat it as a story about affordability. For an investor it is something more useful: a map.

Permitting speed is, in the authors' words, "a systematic city-level object." It does not change with the business cycle and it does not travel from one city to another. It therefore sorts every market in the country into one of two categories, and an owner ought to know which category he has bought into.

The fast-permit cities, among them Nashville, Austin, Raleigh and Phoenix, are growth markets that carry supply risk. The same seven-week permit that allowed Nashville to boom is the reason Nashville's city rents are down 2.9% from a year ago (although they are now increasing again). This past "glut" that so many commentators have described is not a malfunction of the system; it is the permitting system working exactly as designed.

The slow-permit cities, San Francisco, Los Angeles, New York, Boston and Miami among them, are scarcity markets that carry growth risk. An owner there collects what is, in the plainest sense, a regulatory rent: 39% more for each year of delay, behind a moat that every would-be competitor must wade through. But there is no free lunch, and the paper shows where the bill is presented. Land is more expensive where permitting is slow, with an R-squared of 0.71, the strongest relationship in the entire study. The moat is paid for on the way in.

In the book, The 5 Ways Real Estate Investors Make Money and Build Wealth, we treat appreciation and cash flow as separate engines because they respond to different forces. This paper tells you which engine a given city runs on. Appreciation in a slow city is driven by regulation; cash flow in a fast city is driven by absorption. They carry different risks, reward different holding periods, and demand different exits.

One caution belongs here, and it is the one I keep returning to. The moat is not a guarantee. San Francisco is the slowest city in this study, and it has been among the worst-performing housing markets in America since 2018, while Austin and Nashville outran it for a decade before giving some of that back. Scarcity protects rent. It does not protect an owner from buying at the wrong price. Speed and returns are not the same axis, and confusing them is how investors end up owning the wrong property.

For readers who want the best plain-English account of how the country arrived here, M. Nolan Gray's Arbitrary Lines: How Zoning Broke the American City and How to Fix It is the book I hand people. Gray spent years as a city planner in New York before writing it, and it is the rare policy book that reads as though its author has actually pulled a permit.

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My Skeptical Take:

The price of a home is set by the permit department, not the construction site.

This landmark study of 1.1 million permits found that the slowest cities take longer to approve a building than the fastest cities take to finish one.

Every year at the counter is worth 39% of rent. To the people who already own.

And the counter has gotten slower every year since 2000. In every region. Including ours.

Here's what I take from it as an owner in a fast city:

Nashville's edge is real. Seven weeks to a permit. An $8,500 fee sheet where Los Angeles charges $95,000. A state that banned the $70,000 line item in 2018.

Nashville's edge is also partial. We're elite at permitting a house and merely average at permitting a building. Raleigh does the same 20 units a year faster.

And Nashville's edge is unprotected. The state let its own shot clock bill die in committee this year while Florida, Georgia and Wyoming passed theirs. We are fast because we were fast, but that doesn't always mean it will continue.

Fast cities give you growth and take away your pricing power. Slow cities give you pricing power and take away your growth. Neither is free. Know which one you bought.

Now, in my mind this begs the question, why do we ask permission to build a single-family house at all?

Why?

Why do we need this permission slip?

For example, in a very positive step, California now requires every city and county in the state to pre-approve a library of dwelling plans and post them publicly. So that a builder who picks a stamped plan is buying a permit rather than applying for one. Japan runs a single national zoning code under which housing is permitted by right on nearly any parcel, and has allowed private, licensed consultants to authorize building permits since 1999. Florida's new law goes further than either: if the city fails to act within the deadline, the permit is deemed approved. Silence becomes yes. That is a permissionless system with a safety net, and it passed a state legislature this year.

Assemble those pieces and the shape of the thing is obvious. Publish the code. Pre-approve a plan library. Let a licensed third-party engineer certify compliance, the way a CPA certifies a return. Inspect the house when it is finished (and when you buy the home), not the drawing before it is started. Put the builder's license, bond and warranty behind the work, so that liability polices quality instead of a queue. The city stops being a gatekeeper and becomes an auditor, which is both a cheaper job and a more useful one.

This would allow the market to solve for the permit delay problem.

Yes yes there are areas where we cannot go permissionless: sewer and water capacity is a physical constraint, not a preference, and floodplain and life-safety rules are not negotiable.

Fine.

Every one of those is an objective test. None of them requires a hearing, a continuance, or a year delay.

That is just insane.

I own in a fast city. A permissionless system would compress the advantage I have been describing all issue and hand some of my pricing power to the next guy with a lot and a plan book.

I would take that trade tomorrow.

Because the alternative is what we have now: a country split into two housing societies, one of which is priced out of the other, held there by the one fix that needs no subsidy, no tax credit and no bond issue, and that we decided was too much trouble to pass.

The architect who laid out Chicago's lakefront had a line for the people who ran that city's permit counter a century ago:

"Make no little plans; they have no magic to stir men's blood."

— Daniel Burnham, architect of the 1909 Plan of Chicago

Burnham wasn't talking about paperwork. But the cities that still stir the blood are the ones that let the plans get built, and the little plan, the one that takes eleven months to approve and stirs nobody's blood at all, is the one we have been making for twenty-five years.

The data is clear as day. Building housing reduces the cost of housing.

Makes me wonder. Maybe the city should start paying a fee to developers to build? :)

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

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