For at least 40 years now builders have complained—without effect, mind you—that overregulation was a cumbersome, costly obstacle to building affordable housing and a contributor to the high cost of all new housing.
To that point, the NAHB last year released a study that showed that government regulation at all levels increases the cost of the average single-family home by $85,000. That means costs associated with regulation account for about 25% of the final price of the average new home, which is one reason like-sized existing homes generally sell for significantly less than new homes, which is one reason the new homes share of the for-sale market is down about 40% from its long term average of around 15%.
When then-presidential candidate Donald Trump promised, if elected, that he would scale back regulation, it must have been music to most builders’ ears. True to his word, one of President Trump’s first acts was to sign an executive order that pulled back federal regulations affecting air pollution control and other environmental standards. That executive order must seem like a step in the right direction to most of you, but it affects housing only tangentially. And, as all of you know, much if not most of the regulatory morass you deal with is local in nature and not subject to change by executive order or fiat on high.
What almost certainly will surprise you is that three months before former President Barack Obama left office, his administration issued a report titled “Housing Development Toolkit.” In essence, it argued for increasing housing supply and lowering housing costs—not by increasing federal subsidies for housing, but rather, by easing restrictive zoning, bureaucratic delay, and other regulations such as historic preservation, growth management, and inclusionary zoning.
Imagine that: Obama, Trump, and the NAHB more or less on the same page.
Despite that, don’t expect some rapid devolution of housing regulation. Almost no one is a purist about eliminating regulation of one sort or another. For example, few people now object to the widespread enforcement of no smoking on airplanes, in restaurants and bars, offices, and many public places. And, by and large, car owners (and the environment) have benefited from tougher, mandated fuel standards. It’s possible those standards in fact saved GM, Ford, and Chrysler. Left to its own devices, the American automobile industry would have turned a blind eye first to the Volkswagen Bug, then to the invasion of fuel-efficient Japanese cars.
The point is, some housing regulations certainly have benefits, and even the most stringent and hard-to-defend regulations (how many builders have told me stories of a 100-acre site being declared a wetland because a small patch of ground puddles after a deluge?) have proponents that can’t be pushed aside.
Compromise, like affordable housing, is in short supply in this country right now. And, to solve the very real problem of overregulation of housing, decrying every regulation, opposing every environmental group, battling every town government, and fighting with every activist citizens’ organization won’t carry the day. And no “big man” (or woman) can huff and puff and blow away regulatory roadblocks. If you have to fight—and you probably will have to—fight not for unconditional surrender but instead for a win-win-win solution. You win. The community wins. And your home buyers win. Hard, yes. Impossible, no.
