- The Vertical
- Posts
- The Vertical | Issue No. 4 | May 28, 2025
EXECUTIVE SUMMARY
Zillow just confirmed what builders and developers have known for years:
Housing affordability isn’t a mystery, it’s math. And math hates red tape.
When prices rise, supply should rise. But in cities wrapped in restrictive zoning, discretionary review, and broken entitlement pipelines, builders can’t respond.
This isn’t about interest rates. It’s about supply elasticity, and when that’s missing, prices go vertical, and affordability evaporates.
THE CORE PROBLEM
1% increase in home prices = 1.7% increase in permits.
…but only in places where zoning allows it.
According to Zillow and Fed data, some metros stepped up. Others shut down.
🟢 Top 10 Permit Overperformers
Cities where builders were allowed to respond to demand.
MSA | % Permit Responsiveness | % Price Growth (ZHVI) | Permits Issued | Expected Permits | Beat Expectations |
|---|---|---|---|---|---|
Pittsburgh | 1.70 | 25.1% | 4,560 | 3,419 | +33.4% |
San Antonio | 1.57 | 40.5% | 24,000 | 19,441 | +23.4% |
Phoenix | 1.17 | 57.0% | 60,926 | 50,915 | +19.7% |
Dallas | 1.52 | 47.7% | 91,460 | 76,979 | +18.8% |
Columbus | 1.66 | 39.6% | 12,202 | 10,465 | +16.6% |
Austin | 1.26 | 59.6% | 44,140 | 37,951 | +16.3% |
Charlotte | 1.93 | 54.8% | 37,799 | 33,663 | +12.3% |
Memphis | 1.42 | 46.9% | 7,808 | 7,053 | +10.7% |
Indianapolis | 1.43 | 45.5% | 18,315 | 16,781 | +9.1% |
Sacramento | 1.05 | 33.0% | 17,307 | 15,900 | +8.9% |
🔴 Top 10 Permit Underperformers
Cities that underbuilt.
MSA | % Permit Responsiveness | % Price Growth (ZHVI) | Permits Issued | Expected Permits | Missed Expectations |
|---|---|---|---|---|---|
Seattle | 1.10 | 40.6% | 15,601 | 21,466 | -27.3% |
Baltimore | 0.55 | 23.0% | 7,711 | 10,351 | -25.5% |
Detroit | 1.96 | 29.8% | 10,248 | 13,343 | -23.2% |
Orlando | 1.33 | 51.5% | 33,482 | 41,981 | -20.3% |
Washington DC | 1.16 | 24.6% | 24,621 | 30,860 | -20.2% |
Boston | 1.42 | 30.4% | 9,288 | 11,610 | -20.0% |
San Francisco | 0.76 | 24.3% | 7,374 | 9,227 | -17.9% |
Portland | 1.19 | 32.0% | 13,949 | 16,778 | -16.9% |
Miami | 1.16 | 51.9% | 14,780 | 17,388 | -15.0% |
Salt Lake City | 1.19 | 47.8% | 9,162 | 10,719 | -14.5% |
The Chart That Says It All
The cities with the worst affordability?
Not the biggest or densest, the ones with the lowest elasticity.
San Francisco. Los Angeles. Seattle. San Jose.
High prices. Low responsiveness. Self-inflicted pain.
The Builder's Nightmare
A national builder bought 550 lots in a growing metro.
Planned to break ground in 12 months.
It’s year 3.
Still stuck in permitting.
Still waiting for a tree removal permit.
That deal is way off projections. And that builder will think twice before investing in that market again.
“Property rights seem sacred until a developer actually owns the land.”
How to Win in a Market Rigged by Policy
This system isn’t fair. But it’s not unbeatable either. Here’s how pros are navigating it:
For Developers/Builders
If you don’t underwrite permit timelines, you’re not underwriting.
A project that takes 24+ months to entitle isn’t a deal, it’s a liability with marketing copy. IRR doesn’t matter if you can’t break ground.Don’t chase buzz.
Pittsburgh won’t win you design awards, but you’ll be framing while the LA guys are still on round two of fire review.Hope doesn’t pay the bills.
If it’s not zoned and mapped, you better be getting a discount. “It should get approved” is not a strategy, it’s a prayer.
For Investors
Don’t underwrite based on rent growth if your builder can’t get RTI.
A 5% projected yield doesn’t mean anything if permits are stuck in staff review for 18 months. Ask for the path to vertical, not just the pro forma.Push your operators for timelines, not promises.
“We think permits take 3-4 months” means they haven’t done this before. You want dates, not guesses.Spread risk across cities with working systems.
Don’t lock your fund into one jurisdiction where everything needs a variance and every neighbor gets a veto.
For Cities
If you’re still talking about the housing crisis but haven’t fixed your own process, you're the crisis.
Start with what’s easy: infill under 50 units.
No hearings. No CEQA. No 12-month site plan reviews. If your staff can’t process a 6-unit building in 90 days, you don’t need more studies, you need new leadership!Legalize housing that already fits.
Duplexes and 4plexes aren’t radical. They’re the homes you already allow next door to a park or a school, just with fewer hoops. Make them by-right and move on.Stop hiding behind parking.
Every “concern” about traffic or shadowing is really just a no disguised as a question. You’re not preserving neighborhood character, you’re locking out the next generation.
You say you want affordability? Then stop making it illegal to build affordably.
Voices From the Trenches
“Rates come and go. A 5-year delay is forever.”
“Councils love giving ‘affordability’ speeches. Then block a triplex because of a tree.”
“Upzoning doesn’t destroy communities. It preserves them from pricing out the next generation.”
“Let the market punish bad development. What we can’t afford is intentional scarcity.”
Final Word
You don’t need to outbuild bad policy.
You need to outmaneuver it.
Bet on buildable metros.
Entitle before you buy.
Underwrite reality.
Dirt without approvals?
Is just a tax bill with landscaping.
Brought to You by JDJ Consulting Group
Southern California’s go-to team for land use consulting and permit expediting.
From duplexes to 200+ unit sites, JDJ helps builders, architects, and investors get projects approved faster and with fewer surprises. We handle zoning, CEQA, clearances, and building permits across LA, OC, Riverside, San Bernardino, and beyond.
We don’t wait for the city to move - we make it move.
NEW: Feasibility Studies for $1K Flat
Got a site in mind? Send us the address.
We’ll tell you what you can build, what stands in your way, and what it’ll take to get to RTI.
Zoning, overlays, height, density, CEQA, red flags all covered.
$1,000 fixed. Fast turnaround. Real answers.
Referral Program Now Live
Know someone stuck in permitting?
Send them our way, and we’ll send you a check.
We work with developers, brokers, architects, engineers, and city staff across SoCal.
📌 Need help on a project or want to refer a client?
📩 jdj-consulting.com