Regulations are Making Housing Unaffordable

by | Apr 2, 2024

Fox News reports that the International Code Council, an organization that develops model building code policies, is finalizing its codes for 2024. Critics correctly argue that the new codes are a “backdoor climate initiative” and will add to the cost of new housing. As I explain in my book, The Affordable Housing Crisis: Causes and […]

Fox News reports that the International Code Council, an organization that develops model building code policies, is finalizing its codes for 2024. Critics correctly argue that the new codes are a “backdoor climate initiative” and will add to the cost of new housing. As I explain in my book, The Affordable Housing Crisis: Causes and Cures, regulations, including building codes, are making housing unaffordable for low- and moderate-income households.

One of the provisions in the proposed codes will require new single-family homes and townhomes to be wired for electric vehicle charging, include wiring to allow for solar panel installation, and be wired for all electric appliances. Undoubtedly, the additional wiring will increase the construction costs of new housing. Home buyers will pay more for these features, whether the buyers want/need them or not. And this is true of many building codes. Indeed, a study by the National Association of Home Builders found that building codes enacted in the past decade have added 6.1 percent to the price of new housing:

…overregulation is exacerbating the nation’s housing affordability crisis. What’s that mean for the Pacific Northwest? Well . . . the Pacific Northwest is about to put building code regulations into hyperdrive. The building code councils for both Oregon and Washington are considering a slew of new proposals that severely limit energy choices by mandating the use of ONLY electric equipment for homes and businesses in our states. So, for heating, water heating and cooking, our homes, restaurants, stores, offices, etc. will eventually ONLY be allowed to use electric equipment – no more clean, efficient and reliable natural gas.

The total cost of regulatory compliance adds more than $93,000 to the cost of the average new home.

At the same time, exclusionary zoning, and particularly single-family zoning, drives up the cost of land within a city. It is not unusual for an empty lot in desirable locations to cost $200,000 or more. This means that even before construction begins, the cost of a new home is unaffordable for low- and moderate-income households. Multi-family housing is similarly impacted by government regulations.

Government’s response to the affordability crisis that it created is more regulations and programs. Rent control and inclusionary zoningforcing developers to offer housing at below market rates—are just two examples:

Inclusionary zoning is a “tool” used by government officials to keep certain kinds of people—usually low-income families and minorities—in a community. IZ is frequently used when gentrification threatens to displace long-term residents. Under IZ, developers are required to include below market-rate housing in the project in exchange for permission to proceed. According to the advocates of IZ, the culture and values of “the community” supersede the values of individuals. “The community” sees certain types of people—usually more affluent and white—as a threat to their values, and they use the government’s club to keep people in the community.

The solution to the regulations that are making housing unaffordable is not more regulations. The solution is to repeal these crippling regulations and restore freedom to housing producers.

Brian Phillips is the founder of the Texas Institute for Property Rights. Brian has been defending property rights for nearly thirty years. He played a key role in defeating zoning in Houston, Texas, and in Hobbs, New Mexico. He is the author of three books: Individual Rights and Government Wrongs, The Innovator Versus the Collective, and Principles and Property Rights. Visit his website at texasipr.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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