All of the cost is labor and materials.
That said, the time component of the zoning, permitting etc is very costly due to how real estate projects are funded and evaluated.
How is this not part of the cost of permitting and zoning! If you took those processes out, those financing costs wouldn’t exist.
Last time I did the math, San Francisco’s permitting process financed at going rates meant a price floor of over half a million dollars for an apartment. That’s before we’ve even built anything.
This is not the same as costing a bunch of money.
The delay induced costs are not the only negative impact. During permitting the muni will often make varrious cost adding demands that they have no basis in law or good engineering to make, but unless you're willing and able to take on more years of delay (and potential litigation costs) you have to go along with them to appease them.
And, of course, every opportunity for a subjective call allowing a disruption is a opportunity for corruption.
When people complain about the costs of permitting they mean the these total costs, not e.g. some 1% of total project costs filing fee or whatnot.
Otherwise you're on a thread where someone is pooh-poohing an effort to improve costs where we know they exist (labor) and suggesting it is meaningless compared to costs that you can't substantiate.
Also remember there are frivolous lawsuits, CEQA type laws (which was recently overhauled atleast in California), NEPA on the federal level which most people roll into the cost of permitting/zoning. This is no meme, this component is huge.
That's not to say some amount of review isn't appropriate, but excess review (wherever the line is) seems to be just a way to discourage building by process nightmare, when there's no other way to do it.
I've also seen a lot of things where variances go to those who have the patience to play politics, which often ends up being pretty inequitable. And then there's the times where permit issuers aren't consistent; request X get told to do Y, update your permit to request Y, get told to do X, etc. Or my favorite, ask to do A, get told to do expensive thing B to prep, do B, then get told A will not be permitted anyway. Typically, there's no recourse for these things either.
Of course it is, why would you think the land and other capital can be held for free?
The issue is that extended timelines drive down the IRR and add risk which is not the same as being expensive to carry.
> All of the local large projects around me are expensive because of massive amounts of red tape
This just isn’t true. There are projects that could be happening but aren’t because of red tape, but no, a project that’s happening is spending a tiny portion of its capital on red tape.
What's more, the fear of doing this has basically staved off all but the most brave companies, or giant conglomerates that can buy land cash, which is the most predictable byproduct of excessive regulation at a local level like this.
[1]: https://jerseydigs.com/american-dream-owners-default-on-1-2-...
[2]: https://www.axios.com/local/phoenix/2023/11/08/one-camelback...
[3]: https://www.reddit.com/r/sanfrancisco/comments/y2ein5
"The issue is that extended timelines drive down the IRR and add risk which is not the same as being expensive to carry."
Confusing statement, the IRR is low and the risk is high because the carrying cost is unknown (and unbounded).
In New York and San Francisco? And it's not just land, it's keeping all the environmental reviews and neighbourhood associations on board. It's delays in pre-selling, or, if you're pre-sold, customer service to impatient buyers. It's constantly redrawing plans because a community member wants an offset 3/8ths of an inch further so their petunias don't catch shade.
Again, these costs add hundreds of thousands of dollars to each and every apartment built in San Francisco.
> This just isn’t true
What are you responding to? The quoted text isn't mine.
Nobody notices it because it's nationwide (and to a certain extent worldwide) and it's a city-by-city policy issue [1][2][3]. But it's the same issue everywhere, over-indexing neighborhood preferences to slow down and kill construction projects behind a permitting process.
[1]: Denver, https://denverite.com/2025/04/14/denver-construction-permitt...
[2]: Toronto/Ontario, https://www.cbc.ca/news/canada/toronto/ontario-housing-const...
[3]: Atlanta, https://www.bizjournals.com/atlanta/news/2024/06/20/metro-at...
I am not denying permitting exists and it slows things down. The original point was that this is a major contributor to cost of construction, which it's not. They specifically said "a small cost seems to be the actual labor and materials [compared to permitting etc]"-- this is absolutely not true. It is not even close to reality in the US.
Here you're just pointing out two facts:
1) Permitting exists (and slows things down)
2) We have a housing shortage
No argument there! But what you are failing to do is demonstrate that (1) is the major driver of (2).
The actual drivers are the cost of well-situated land, cost of labor, and cost of materials. This is evident in ANY actual budget from ANY actual construction project.
Add to that the fact that large scale homebuilders are petrified of creating a 2008-style oversupply so they've been chronically underbuilding since then -- and will continue to do so regardless of permitting reform. This is evident in the housing starts compared to population growth since the GFC.
But specifically, it's the worst one because it's unbounded (labor and materials is really costly now, but its a known cost) especially in states with heavy environment regulations or other zoning regulations. In those states, usually any one person can bring in a lawsuit alleging a lack of environment studies or alleged personal damage to slow down construction, so how much holding costs do you budget for? How much lawyer fees? How many people will bring lawsuits? You have no idea!
Most projects just don't start if they have a bracket for unbounded costs like that. So now you have fewer and fewer parties willing to take on these projects with more and more people (neighbors, bureaucrats etc.) having the bandwidth to pour over each individual project looking for an opening to sue and stop. It's a doom-loop of red-tape.
Do you think the California legislature (not the San Francisco legislature mind you) is wasting its time dealing with this, if it's "not that big of a deal" [1]. The governor ransomed the whole state budget to get this passed. Similar things happened in Minnesota. This is a huge deal.
I encourage you to read the various books laying out example after example of these issues and the background data [2], [3].
[1]: https://calmatters.org/housing/2025/06/ceqa-urban-developmen...
[2]: https://www.philipkhoward.com/the-rule-of-nobody
[3]: https://en.wikipedia.org/wiki/Abundance_(Klein_and_Thompson_...
I have at least skimmed every one of the links you've shared (except the Atlanta BizJournal since I don't have the nationwide subscription) and none of them say what you're suggesting they do.
I agree there's a problem here. I agree that these risks kill many projects before they are birthed. I do not agree they come anywhere close to the costs of land, material, and especially labor for any actual construction project. Nothing you have posted even attempts to argue that, AFAICT.
It's like buying a home and having to pay 10% in agent fees and having a 6 month arbitrary holding period while you are still having to pay the mortgage. "Well the money you're losing is less than the cost of the land!" you would say. lol.
That's basically what's happening to construction projects, it's an industry-wide show-stopper regardless of what fraction it is of the land price.
All the links I've shared confirm that these costs are the prime-driver of project cancellations and projects dying on the drawing board, not that the costs are larger than all other costs in an absolute sense because obviously mortgage payments while you're waiting for lawsuits are less than the whole land value itself.
You are now saying the exact thing that I stated above.