There are all sorts of burdensome government regulations that make it harder for average Americans to make ends meet — alarmist environmental edicts and inane occupational licensing rules to name just two.
But one area tends to get overlooked in the raft of regulations: housing. For as much as our political leaders carry on about making homeownership accessible to as many people as possible, they have a funny way of showing their support for such an ideal.
Last week, the Wall Street Journal reported that new research from the National Association of Home Builders reveals the average cost of complying with regulations governing new home construction has increased by nearly 30 percent over the past five years. Among the culprits: local impact fees, storm-water discharge permits and new construction codes.
The home builders association pointed out the dilemma: How can you build affordable, single-family construction projects when you can’t gain any cost control due to the ever-meddlesome regulatory state? Paul Emrath, vice president for survey and housing policy research at the association, told the Journal: “It really makes it hard to satisfy the lower end of the market, which is a lot of first-time buyers.”
How hard? The report states that in March, the cost of regulation during the land development and construction process represented nearly $85,000 of the cost of the average new single-family home. That’s a huge leap from the 2011 number of about $65,000, which is ridiculous enough on its own.
The Journal reports that California firm John Burns Real Estate Consulting released a survey last month detailing an explosion in new regulations and fees that didn’t exist a decade ago. One example: $7,500 to $15,000 in additional costs per home to comply with tree-planting requirements in parts of Georgia.
To our West, the exorbitant housing costs in California are a classic example of how tax policy, zoning codes, land-use restrictions and other regulatory mandates work to price middle- and low-income earners out of the housing market.
Las Vegas is better than most areas in this respect. But both local impact fees and the dearth of privately owned land serve to drive up local housing prices. Here and elsewhere, the key to encouraging affordable housing — and job creation — is to avoid regulatory overreach.