According to the Building Industry Association of Clark County’s (BIA) national counterpart, the National Association of Home Builders (NAHB), regulations imposed by government at the federal, state and local levels account for $93,870 of the final price of new single-family home.
Of the $93,870, $41,330 is due to a higher price for the finished lot, attributable to regulations imposed during the lot’s development. The remaining $52,540 is the result of regulatory costs imposed on the builder during construction, after the builder purchases the finished lot.
Regulatory costs include the following factors:
- Changes to building codes (over past decade) = $24,144
- Fees paid by builder after purchase of lot = $12,184
- Hard costs of compliance (such as required studies) = $11,791
- Land dedicated for government uses (such as parks) or left unbuilt = $10,854
- Architectural design standards that go beyond the ordinary = $10,794
- Standards (such as setbacks) that go beyond the ordinary standards = $8,992
- Cost of applying for zoning approval = $6,473
- Safety and labor requirements = $6,256
- Cost of delay(s) = $2,382
Some would call this the perfect storm: lumber prices are at historic highs, widespread shortages of materials and labor, demand for housing far outweighing the current inventory and regulations constantly changing. The BIA would caution cities and the county in making any sudden, dramatic changes in local design standards and fees (such as impact and permitting fees). With what the industry is experiencing with Washington’s new Energy Code, elected officials and government agencies should be cognizant in what seemingly small changes can do to the final sales price of a home.
“It’s the first-time homebuyer and those in their golden years looking to downsize that are going to feel price increases the most,” said Avaly Scarpelli, BIA’s executive director. “If the goal is affordable housing, more regulation is not the answer. Clark County is drastically under-built and builders can’t build fast enough to satisfy demand. Bidding wars and homes being sold at well over the asking price is the new normal. In a time when housing is desperately needed, now is not the time to make radical changes, like fee increases.”