This week, Harris County approved new development regulations intended to reduce flooding. New homes in unincorporated areas of the county will have to be built to higher standards, including elevations that may be 8 feet higher than previously required. The new regulations will increase building costs by thousands of dollars, and come at a time when the Houston area is being chastised for the lack of affordable housing.
One of the primary causes for rising housing costs is government regulation.
As an example, Richard N. Maier, an executive at home builder DR Horton, details the cost of regulations on one property in Austin, Texas. In his article, Maier lists the costs of various city regulations:
- Historic Preservation– $16,226
- Heritage Tree Ordinance– $2,742
- Impervious Cover– $79,800
- Storm Water Pollution Protection– $1,563
- The “McMansion” Ordinance– $12,500
The cost of these regulations came to $112,831! Maier notes that the average builder operates on a margin of 18 percent, which could bring the total cost of regulations to $137,598. This is the amount that the home price will be increased simply to pay for government regulations. As of yesterday, Zillow reports that the median home price in Austin is $334,400. The cost of regulations on this one property represents more than 40 percent of the median home price.
The new development regulations won’t send housing prices soaring. But they will contribute to higher housing costs, and that means lower affordability.
One the one hand, we have various activists, as well as City of Houston officials, clamoring for more affordable housing. On the other hand, we have another noisy group demanding that measures be taken to reduce future flooding. And both groups want government to solve the problem. Given that government officials have proven incapable of solving either problem in the past, we must wonder why anyone thinks they will solve these problems in the future.
The fact is, government meddling drives up the cost of housing. The current efforts to reduce flooding are only going to add to the cost. And Houston will continue to experience flooding.