I was reading a couple of articles over the weekend by two executive members of the National Association of Home Builders. They were talking about the gradual recovery of the new home market throughout the United States.
Housing production has increased by 120 per cent since 2009 but is still only at 58 per cent of the production levels that were considered normal. Although there were several factors cited for this lengthy recovery process, one highlighted by both authours was over-regulation.
Chief Economist Robert Dietz noted the rising costs of government regulations through rules, delays and fees can add tens of thousands of dollars to the price of a new home. It isn’t any one level of government but rather the accumulation of hindrances from all three levels.
He noted local governments charge for permits, hook-ups and impact fees while establishing and changing development and construction standards that increase costs or cause delays. State governments establish building codes while the federal government makes certain land use decisions and creates labour and environmental standards.
Their research showed that 24.3 per cent of the price of an average single family home is due to costs generated by government regulations. Furthermore, the lot development process is responsible for 60 per cent of these costs.
Board Chair Ed Brady adds that regulatory costs have risen 30 per cent in the past five years. Unfortunately, this then means that the cost of a new home is increasing twice as fast as the consumers’ ability to pay as disposable income has risen 14.4 per cent over the same period.
Neither gentleman questions the need for sensible regulations that keep workers safe and result in a better home being built. However, excessive mandates that accomplish little more than to increase the cost of housing do not belong on the books.
Housing affordability has become the No.1 issue for the NAHB and regional home builder associations throughout the United States. The feeling is that governments should be part of the solution to make homeownership accessible and affordable.
However, this is an American problem isolated to those living south of the border. Overregulation and unnecessary government costs negatively impacting the price of housing could never happen in Canada or Manitoba or Winnipeg. Or could it?
Mike Moore is president of the Manitoba Home Builders’ Association
