Get free daily email updates

Syndicate this site - RSS

Recent Posts

Blogger Menu

Click here to blog

Tim Coyle

Costs Continue to Vex New Housing

You’re hoping that excessive housing costs don’t have an effect on consumers, aren’t you? After all, you may have supported a few of those costs and backed the local governments that charged them.

Like solar power. Who doesn’t like a renewable like solar? So, you may have looked the other way when the state imposed a system-installation mandate for all new single-family homes.

That is until you’ve entered the market for a home and you get the bill for a new one: More than $800,000. That is the median price for a home in California today. The amount will change tomorrow – and will be worse.

About $50,000 of the home price will pay for the solar panels and their installation – starting now all new homes built in the state must have them. You probably supported the solar initiative. Most people in California did.

The cost of solar comes on top of myriad local charges for approving new California housing. Those exactions are summarized in a March, 2020 study by UC Berkeley’s Terner Center of Housing Innovation and include:

• Land costs, which have doubled, even tripled over the first 16 years of the decade;
• Development fees, which exceed $120,000 per home in many (state) communities;
• Permitting delays, hidden from view to most folks but a primary development cost;
• Regulatory demands, where design, CEQA and other hurdles must be cleared; and
• Affordability mandates, where some “affordable” units cost nearly $500,000.

They’re others but these are the big costs. And, not being exclusive to California, together they have lifted the nation’s median home price to a record high: $350,000. By the way, median is the midpoint in the array of prices – meaning half the country’s housing units cost $350,000 or less and half are more.

The renowned “think tank” Brookings Institute also acknowledges the influence of cost on housing affordability. The Institute did a study last year on housing cost. Here’s what they had to say about homebuilding, in general:

The process of building new homes is full of uncertainty and unexpected obstacles. Regulatory barriers make it riskier, longer and more expensive, which has consequences for housing affordability.

It gets worse:

Most localities . . . require an [assessment of] the proposed development’s effects on traffic congestion, noise levels, wildlife, soil erosion, wetlands preservation and more. Each step required by local governments . . . has a purpose, whether it’s preventing environmental damage or providing essential infrastructure. But there are . . . costs associated with the process: fees for lawyers, surveyors and specialized consultants as well as infrastructure costs.


Time spent by local officials in reviewing documents and holding hearings also represents an opportunity cost for the private sector.

Every $1,000 of cost added to a home chases about 150,000 shoppers from housing markets, nationwide. The California community of Dublin charges every new home $156,000 – over and above land and the cost of construction. Think Dublin’s fees have some excess in them?

Just think how we would be on affordability in the state if locals began shaving off of their charges $1,000 a shot . . .