Architect Mike Davis, of the Harold W. Smith Co., says 36 years ago it used to take a day to get a building permit for a single-family home in Contra Costa County, Calif. Now it takes a month or more.

Austin, Tex.-based Clark Wilson Homes spends seven to 12 months obtaining building permits after an application for rezoning. Company executive Nedda Brown says regulatory reform would speed up the process and save home buyers thousands.

Bill Ganzenmuller, an executive with Chesapeake Homes in Norfolk and Virginia Beach, Va. says the lack of uniformity in building codes and regulations is so pervasive that it costs him $5,000 more in preconstruction fees for homes in one community than it does in another community just five miles away.

Burdensome regulations and related fees levied by all levels of government drive up home building costs and add and average 10 percent to the sale price of a new home, according to a National Association of Home Builders (NAHB) poll of home builders in 42 metropolitan markets.

At the bottom line are home buyers who suffer the brunt of a maze of regulations so costly some of them are forced out of the market. If the price of the typical home profiled in NAHB's study could be trimmed 10 percent, an additional 4.8 million households could afford to purchase the home, the report says.

"We can't absorb it, so home buyers wind up paying it, and it has no value to them," says Ganzenmuller.

Ganzenmuller and the others were interviewed for NAHB's "The Truth About Regulatory Barriers to Housing Affordability," the scathing report compiled from a new study that examined how the rise in regulations and related costs are inflating the cost of a home.

In the survey, NAHB asked builders to provide a detailed breakdown of the cost of constructing a 2,150-square foot home with three or four bedrooms on a 7,500 to 10,000 square foot lot.

The average sales price of a new home in the 42 markets was $226,680 and builders estimated that an average 10 percent of the cost, or $22,668, could be trimmed from the price if unnecessary government regulations, delays and fees were eliminated.

The savings varied widely by region. In Grand Rapids, Mich., for example, the sale price of new home could be cut by only 4 percent if unnecessary regulations were outlawed. In the more urban, densely population San Francisco, builders put the savings at a whopping 28.6 percent.

"The bottom line is that there are too many approvals and reviews for land development, and many are repetitive or overlapping," said San Diego builder Forrest Brehm, who like the others were interviewed for the 15 page report.

Conditions aren't likely to improve soon.

Almost half the builders interviewed (48.6 percent) said the length of time to obtain a routine single-family project approval increases considerably between 1987 and 1997. None of the builders said project approval time had lessened during the period.

More than three-quarters of the builders said there were significantly more state and federal regulations over the decade and 10 percent said the cost to develop a lot for building increased by 100 percent or more between 1987 and 1997. More than 23 percent said development costs increased by 50 to 99 percent during the period.

"Streamlining the regulatory process could save home buyers at least $4,000 per single-family unit," said Thomas Brown with American Builder Services, Inc. in Baltimore, Md.

Published: November 6, 1998

Use of this article without permission is a violation of federal copyright laws.