Building Permits And Housing Affordability
Building permits and housing affordability go hand in hand. Without building, increasing population has nowhere to live. Build less housing than is needed and prices skyrocket quickly. Build too many homes and prices remain flat. Areas with unfriendly building departments concentrate on the west coast and northeast. Cities such as LA, San Francisco, Boston, and Portland actively discourage much building through inflated fess and requirements built into law. Vast bureaucracies exact a pound of flesh each step of the way through increased costs and long, long time frames to obtain permits.
Comparing Cities
As an example, look at total building permits for some select cities in the chart below. The top places to build routinely show Atlanta, Dallas, Houston, and Austin. Los Angeles, the largest, most populous city in the US rarely comes in above 5th or 6th place. At times Nashville, (Nashville!!!) builds as many homes as LA. LA metro population of more than 13 million dwarfs Nashville’s less than 2 million. San Francisco, Seattle, Portland usually rank near the bottom in permitting housing. What do LA, Portland, Seattle and San Francisco have in common? Massive homeless populations. Expensive housing for old, crappy houses. New, modern housing remains virtually unaffordable for normal buyers or families.
And yet, these cities continue to add hurdles to building. LA initiated an effort to build homeless units, but those now come in at $1 million each. That’s more than twice any projections. Much of it ends up in the pockets of consultants, lobbyists, attorneys and a variety of groups skimming off fees instead of helping homeless.
Misguided Efforts
Housing advocates in California have initiated more misguided efforts. Rather than work on the affordability aspect and the obstacles to housing, they seek to remove all single family zoning. The Terner Center (a California think tank for wayward real estate policies) is pushing this agenda. Their solution involves forced government intervention instead of creating better incentives and decreasing existing government intervention.
Count on the cost of any new building to have an additional layer of cost and delay to “solving” the lack of housing. It’s very difficult to create affordable housing when the government assesses perhaps $250,000-$500,000 in fees and costs before turning a shovel of dirt. Compare that to the affordable housing areas with fees and taxes by the government and costs 1/10th or 1/25th as much. Building permits and housing affordability can’t be separated. Failing to recognize that government fees, taxes, regulatory burdens, government delays and massive bureaucracies cause lack of affordable housing defies common sense. These same government entities then create vast bureaucracies to “solve” the problems they themselves created.