Homebuilders: Regulation accounts for 25% of a new home's price
In Maryland and across the country, local and state agencies shape the homebuilding process through regulations -- rules about where and how companies can build. The idea is to avoid problems.
But the National Association of Home Builders says regulations add a substantial cost, accounting for 25 percent of the price of a new single-family home.
The trade group's study, conducted by HousingEconomics.com, relied on survey responses from homebuilders, including firms with experience acquiring land and developing lots.
As you might imagine it would, the report suggests government officials think twice before adding more regulations in an environment where "builders are already reporting new homes appraising at less than the cost required to produce them."
The cost of regulation and regulatory-related delays tends to be somewhat higher in the Northeast, the study says.
Maryland -- at the cusp of the Northeast and South -- has a variety of rules that vary from county to county. Some are of the building-code sort. Some are queues designed to control the pace of development so it doesn't get ahead of new schools. And some require upfront fees to pay for the impact of more people on the roads and students in classrooms.
Maryland's "impact fees" are among the highest in the nation, according to a separate survey by impact-fee consulting firm Duncan Associates.
Duncan Associates says Maryland is one of the few states where you'll find impact fees for school construction, one explanation for its high ranking. Impact fees of all sorts average about $8,900 in the state for a single-family house, close behind No. 2 Florida but far behind the No. 1 state. The average impact fee tally in California is more than $23,000.
Impact fees under $5,000 for a single-family house are more typical, the 2010 survey found.
So, is this bad, good or neutral? It really depends on your perspective.
Plenty of suburban Howard County residents were aggravated with development when I covered that beat in the early part of the housing bubble, so they liked anything that slowed the pace and contributed fees for capital improvements.
If you're a homebuyer, you might wish for fewer regulations if it would mean a lower price tag. Or you might not, depending on the sort of house and neighborhood services you'd get without them. Difficult to tell without being able to compare.
Homebuilders, meanwhile, tend to complain the most about rules that bog down the pace of work -- especially if it's inconsistent, like a commute that's 15 minutes some days and an hour on others.
Are there local building regulations you love or hate? Do you think, all told, development rules are worth the bottom-line cost?