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Addressing The Affordable Housing Crisis

America’s housing shortage has hit a tipping point. There is not enough affordable rental housing in America to support the expanding population of families in need. So how in a country of abundant resources is this possible?

Hint, it’s not a resource issue. While most cities such as LA suffer from a limited amount of viable land on which to build, the most significant factor in the US housing shortage is the massive amount of regulations imposed on developers and builders.

According to a recent report issued by the National Association of Homebuilders (NAHB)
Over 30 percent of the cost for every development deal goes towards regulation fees. For an industry with notoriously tight margins of profit, this is a substantial percentage.

When you break down the average development deal, you will see some of the following roadblocks that have helped bring about this affordable housing crisis.

  • Excessive Zoning Fees
  • Lengthy Approval Times
  • Special Requirements (those that exceed building code but are required by the field enforcer)
  • Ever changing OSHA codes
  • Massive Over-reach by OSHA
  • Government land allotment (parceling out land for Government use)

All of these are costly in and of themselves, however, add lengthy delays caused by these excessive regulations and you have the perfect storm for stagnant new housing growth. In total local, state and federal regulations cost developers on average 32.1 percent and in some cases, this cost can go as high at 43 percent.

What then is the answer? If we are honest, there is no simple answer, however, if we reduce the barriers we take a step in the right direction. To do so, we must end the dizzying array of land use regulations that increase cost. This is not to say that we should do away with all building regulations, but rather to streamline the process and stop denying that heart of the issue, is too many onerous regulations for developers and builders.