The recent Congressional hearings about residential permits brought to mind a statistic which was hidden away by the pandemic and its impact. According to the NAHB (National Association of Home Builders) findings back in 2021, regulatory costs at the federal, state, and municipal levels accounted for 24% of the final price of a new home built for sale.
To put that in perspective, regulatory costs account for $96,000 on the purchase of a $400,000 single-family home. Here we are in 2025 with increased concerns about supply chain issues and rising material costs, especially with lumber and steel. Builders and developers are being backed into a corner, and that's without proposed legislation to attempt to combat investors (such as our Feb. 25,2025 column).
Based on the above paragraph alone, there are more challenges now than there were a few years ago for adding new housing in areas where there is a clear need. Over the years, one of the elements I have stressed with my marketing clients is to examine zoning options for parcels and communities they are considering. Keep in mind that some of the regulatory fees go for home building, which may or may not be enforced for a commercial build. It might be time to consider a wider variety of cost options when it comes to making important decisions.
It was helpful to see that the NAHB was well represented at the recent Congressional hearing. If it can be made easier for builders, the housing problem could be solved much faster, and be more affordable for all concerned.
https://www.nahb.org/news-and-economics/press-releases/2025/02/home-builders-tell-congress-how-permitting-roadblocks-raise-housing-costs
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