Builders Call for Regulatory Reform to Lower Housing Costs

Heightened regulations in the housing industry are hindering affordable housing in the U.S., and home builders believe it is time for a change.

In light of June's acknowledgement of National Homeownership Month, the National Association of Home Builders (NAHB) demanded that all Americans have access to affordable housing. The way they suggests tackling this issue by implementing "sensible reforms to burdensome regulations that increase the cost of housing."

NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Illinois said, “The aggressive over-regulation of the housing industry is putting the American Dream of safe and affordable housing at risk."

Regulations in the housing market are not only an added responsibility for mortgage companies, but it seems that compliance costs are spilling over into American households.

A recent study titled, "Government Regulation in the Price of a New Home" by Paul Emrath, Ph.D., VP of Survey and Housing Policy Research for the National Association of Home Builders(NAHB), estimates that 14 million households are "priced out" of the market due to regulation.

The report showed that government regulations increase the new home price by an average of 24.3 percent, or an additional $84,561. This number is up significantly from 2011 when regulatory costs were $65,224. This phenomenon prices out households so they no longer qualify for a new home mortgage because of higher prices.

Emrath noted, "builders and developers have probably not yet felt all the impacts of regulations looming on the horizon. A substantial number of regulations have been implemented recently, are in the process of being implemented, or are under active consideration by key policymakers."

He continued, "Based on this it would be reasonable to argue that the rate of increase in regulatory costs embodied in the price of a new home is accelerating."

“Regulators at all levels of government–local, state and federal–must understand that their actions have real consequences,” said NAHB CEO Jerry Howard. “The cost of regulation in the price of a new home is rising more than twice as fast as the average American’s ability to pay for it. That is simply not sustainable.”

 

The NAHB stated that it will continue to advocate for affordable housing to make it a reality and priority to leadership figures in the U.S.

“Common sense reforms to the regulatory approval process would open the doors of homeownership to more Americans across the country,” Brady said.

He continued, "Homeownership remains a core American value to consumers across the country. In addition to building stronger communities, homeownership provides a solid foundation for family and personal achievement. It is critical that we keep this dream within reach, and not price out buyers with needless overregulation."