Washington, D.C. – Regulation imposed by all levels of government accounts for an average of 40.6 percent of multifamily development costs, according to new research released today by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC).
“The U.S. is facing a serious housing affordability crisis, in part, because of this overly burdensome regulatory environment,” said Doug Bibby, NMHC President. “We need to do all we can to lower the cost of housing, and that should start with eliminating duplicative and unnecessary regulations. Those extra costs make many projects financially unviable given that housing providers are already dealing with sky-high land, materials and labor costs.”
”This study clearly shows how burdensome regulations are exacerbating the nation’s housing affordability crisis and that officials at all levels of government need to make it a priority to reduce excessive regulatory costs to allow developers and builders to boost housing production and ease affordability challenges,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga.
Apartment developers are subject to a variety of regulations at all levels of government. Among others, they include zoning requirements, building codes, impact fees, permitting requirements, design standards, public land requirements, and federal Occupational Safety and Health Administration regulations and other labor requirements. Smart regulations play an important role in ensuring the health and well-being of the American public, but many regulations such as design standards go far beyond those important goals, and impose costly mandates on developers that drive housing costs higher. Others are duplicative and require resources to confirm compliance with multiple regulators.
This new research, based on a survey of 49 developers across the United States, also examined regulations and other factors that can impact whether development even occurs. Three quarters (74.5 percent) of respondents said they encountered “Not In My Backyard” (NIMBY) opposition to a proposed development. Confronting that opposition adds an average of 5.6 percent to total development costs and delays the completion of those new properties by an average of 7.4 months.
The research asked detailed information about affordability mandates. Slightly less than half (43.8 percent) of respondents said their typical project was in a jurisdiction with inclusionary zoning, a regulation that requires developers to offer a certain number of apartments at below-market rents. Covering the costs of those lower rents, on average, resulted in a 7.6 percent rent increase.
As a result, 47.9 percent of developers said they avoid building in a jurisdiction with inclusionary zoning requirements. Fully 87.5 percent avoid working in jurisdictions with rent control. This translates into housing not being built in many areas where it is so desperately needed.
Identifying duplicative and unnecessary regulatory costs is a critical factor as we work to address the critical shortage of affordable housing facing this nation.
About NMHC: Based in Washington, D.C., the National Multifamily Housing Council (NMHC) is the leadership of the apartment industry. We bring together the prominent owners, managers and developers who help create thriving communities by providing apartment homes for 40 million Americans, contributing $3.4 trillion annually to the economy. NMHC provides a forum for insight, advocacy and action that enables both members and the communities they help build to thrive. For more information, contact NMHC at 202/974-2300, e-mail the Council at firstname.lastname@example.org, or visit NMHC's website at www.nmhc.org.
About NAHB: The National Association of Home Builders (NAHB) strives to protect the American Dream of housing opportunities for all, while working to achieve professional success for its members who build communities, create jobs and strengthen our economy. NAHB Multifamily provides services, benefits and opportunities to members with an interest in multifamily housing, including multifamily member meetings, newsletters, events, webinars and multifamily housing awards. It coordinates with other NAHB departments on advocacy efforts, economic studies and resources for multifamily housing. For more information, please visit NAHB Multifamily at www.nahb.org/nahb-community/councils/multifamily-council.