Every permit has a limited time it can be open. You are not allowed to begin working until you open the permit. Each permit is very, very expensive. Let's say I wanted to remodel my bathroom in two stages: first sink and floor and toilet, next year shower and fan. I would need electrical permits both times (>$500 each with inspections), plumbing permits both times (>$500 both times), mechanical permit (>$200), "remodel permit" at least the second if not both ($300 + 1/3 of "equivalent cost for the full job if a contractor were doing it"). So massive financial penalty to doing it piecemeal.

I wanted to move some non-load-bearing walls. To grant a permit, the city required I provide full blueprints for the entire house including the slab and foundation; documents they themselves didn't have when the house was actually built from the ground in 1950 nor when it gained a new floor in the 1960s.

Every time you open a permit, everything you touch has to be brought up to that year's code. You installed wiring in 2011 under the first permit but by 2020 they have new requirements and so you have to redo it because you want to add one outlet to the end that would have been considered perfectly safe in 2011 (and still is under any reasonable cost-benefit analysis).

Layers and layers of regulatory capture and revenue generation have made it financially infeasible to build houses gradually while compliant with the law. My city has somebody driving around trying to catch you working without a permit.

Wow, that sounds pretty bad.

The only time when I encountered something even remotely similar here was when my parents lived in a big apartment building and they wanted to remodel a 4 bedroom flat into a 5 bedroom flat. We did need to get all kinds of permits, submit various certified drawings (mainly due to planned installation of the extra window on the outside), the permit was for 2 years, but it could be extended. I remember permits weren't expensive, but it took a lot of beaurocracy.

They needed all these permits, because it's an apartment building, also it's owned by a local version of a coop/housing association. It's a peculiar ownership structure I suppose common to ex-communist countries. Each member owns shares in the coop and the coop owns all the land, the buildings etc, it evolved from the communist times. It let people keep their flats without having to buy them fully. My parents couldn't buy more than a 5% stake in the flat and they paid rent for the remaining 95% (in addition to all the maintenance etc).

Many years later when I was building my house. The actual permit to build cost me $30 in fees. Of course I had to hire an architect, a building site manager, a land surveyor which amounted to around $3k if I remember correctly just for them to create all the paperwork, put their stamps on it and certify what I'm about to build is not going to fall on someone's head a decade later. Once I finished the house I had to submit a notice of finishing with 12 pieces of paper if I remember correctly that ranged from my electrician and plumber statements with their respective qualification numbers, to my well water lab analysis results, the ventilation survey, the energy efficiency survey and more. Most of these cost me money paid to individuals that did the checks, but not to the city. The notice was free to submit (well, it's cost was included in the $30 for the permit).

You can do that generally in the US. You’re not allowed to do things like move into a house without running water, toilets, etc.

In most of the US (by population density) you are not allowed to do that type of work without a permit and permits would not be allowed to be open for 7 years. You would not be allowed to move into a house of any part of it did not meet current code, so the entire exterior would have to be complete, with insulation and insulation must be covered and every room must have so many outlets and so on that effectively almost everything except baseboards and casing needs to be complete before you could move in even to part of it. Hard to save money if you have to pay for two homes and permit renewals for years.

You would need to get a certificate of occupancy, yes. You would also need permits for some unfinished work, too.

You brought up the exterior needs to be finished. Do you expect to move in with just the frame? It seems fair to me to have requirements of basic livability and safety.

You could move in with things like some of the bathrooms unfinished, a kitchen unfinished if you have a kitchenette elsewhere, extra bedrooms unfinished, etc.