In the olden days here in Toronto, approved development land used to sell for a premium compared to unapproved land. This was true because approved land meant you could start construction much sooner. And since time has value, this was worth something.
Today, this is far less valuable to developers (if at all) because, in most cases, the market does not support new construction. So, the land may be approved, but what does one do with it?
Rather than speed, I would say that the most valuable feature right now is the ability to be patient. Developers need to be able to stay solvent long enough for the market to return. But this does not mean that there isn't a cost to permitting, approvals, and lengthy pre-construction periods.
Here is a recent paper (that I discovered via Thesis Driven) by economists Evan Soltas (Princeton) and Jonathan Gruber (MIT) that asks: "How Costly Is Permitting in Housing Development?" What they discovered in the Los Angeles market is the following:
Developers have been willing to pay roughly 50% more for pre-approved development land (averaging about $48 per square foot).
The permitting process in Los Angeles accounts for about 40% of the time required to develop and construct a new housing project.
Approximately one-third of the gap between home prices and construction costs can be explained by permitting costs and delays.
This last point is an interesting one to focus on because it tells you how much regulatory fat there is in the system. In a perfectly free and efficient market, the market price of a home should, in theory, be roughly equal to the cost of the land, construction costs, and the developer's margin.
When you have a massive gap between the cost of the physical materials and labour required to build the home and the price of the home, it means that there are other costs being shouldered. The paper refers to some of these as "pure wait" (time) and "capitalized hassle" (dealing with bullshit).
This is an important way to think about the efficiency of housing markets, because minimizing the gap is a clear way to make housing more affordable.
Cover photo by Josh Miller on Unsplash
Earlier this month, self-driving car company Waymo announced that it had raised $16 billion (largely from its parent company, Alphabet) at a $126 billion post-money valuation. This is a big number. And according to Bloomberg, the company's annualized revenue run rate is around $350 million, meaning its current valuation is sitting at 360x revenue.
Multiples can often be sky-high for new, huge-bet companies, but Om Malik recently offered an interesting take on the "physics of the problem."
As of the end of 2025, Waymo was operating approximately 2,500 vehicles across its cities, with San Francisco and Los Angeles currently responsible for about 68% of the company's rides. And these cars are already running 16 hours a day, with an estimated 18 minutes of average idle time between trips.
To get from 400,000 trips per week (where they are today) to 1 million trips per week (where they want to be by the end of 2026), Om estimates that the company will need to add at least another 3,500 vehicles to its fleet.
If I then ask Gemini to extrapolate this out such that its revenue increases enough to drop its multiple down to 30x revenue, the company needs a global fleet close to 25,000 vehicles. That's ~22,500 more than it has today, and at $175k per Jaguar, that's an additional $4 billion in vehicles.
I guess it has the money for that, but it'll be fascinating to see how easily the company is able to scale around the world. This year, the plan is to expand to 20 more cities (with a list that erroneously leaves out Toronto). If successful, this will have a profound impact on our cities. And the lofty valuation represents an expectation that it will be.
The Stahl House — also known as Case Study House #22 — is up for sale in Los Angeles.
Even if you don't know this house by name, I'm sure you've seen Julius Shulman's iconic photograph from 1960 showing two women sitting in a corner of the house. It is widely credited with turning the house into one of the city's most recognizable landmarks.
Buck and Carlotta Stahl are the original owners. They purchased the steep lot for US$13,000 in 1954 (equal to about $157,000 today). This was a large sum of money at the time, especially for a lot that was thought to be unbuildable by many architects.
Designed by architect Pierre Koenig, the house was built as part of Arts & Architecture magazine's Case Study program, hence the name. The intent of the program was to come up with templated responses for an expected housing shortage following the Great Depression and World War II.
When the program launched, it stated that "each house must be capable of duplication and in no sense be an individual performance," and that "the overall program will be general enough to be of practical assistance to the average American in search of a home in which he can afford to live."
Sound familiar?
The program also secured material donations from the building industry in an effort to make the prototypes as low-cost and repeatable as possible. Ironically, the house became the exact opposite: It became a singular icon of Los Angeles, used in movies, for fashion shoots, and as a general backdrop for a modernist city.
And today, after 65 years of stewardship under the original owners, the house is on the market for US$25,000,000. This works out to nearly US$11,400 per square foot of interior space.
When I first saw the list price I immediately thought to myself, "Interesting, I wonder how much of this price is being attributed to the real estate and how much of it is being attributed to its status as an icon and piece of art."
I don't know the LA market very well, so I asked Gemini 3. What it told me is that comparable high-end homes in this area with pools and luxury views often trade for around $2,000 psf. That would put this real estate at around $4.4 million.
If this is accurate (correct me if I'm wrong, LA people), it means that something like 80% of its list price is being derived from its "brand." Not bad for a case study house built with low-cost subsidized materials.
The other possible consideration is that people really like to photograph and film this house. And so there's also a potential income stream associated with buying it. Assuming that continues (and AI doesn't replace the need for physical shoot locations), then we'd also have to capitalize this income.
In this case, the house would have three value components to it: real estate value, art/brand value, and rental income value derived from movies and shoots. Is that equal to $25 million? I don't know, but the market should tell us soon enough.
Cover photo by Julius Shulman