When home rises $1,000, more than 200,000 priced out
For every $1,000 increase in the cost of median-priced new homes, an estimated 206,269 households are pushed out of the market, according to a new study by the National Association of Home Builders.
The study finds that government regulations imposed on the construction industry — for example, raising the price of impact fees or construction permits — translates to a hike in new-home prices. And for every $833 incurred in building fees, there is a $1,000 increase in house prices, which disqualifies more households from obtaining mortgages.
“This study highlights the real effects that building regulations have on housing affordability,” said NAHB Chairman Kevin Kelly. “Local, state and federal government officials need to know that higher regulatory costs have real consequences for working American families. Oftentimes, these government regulations end up pushing the price of housing beyond the means of many teachers, police officers, firefighters, and other middle class workers.”
The number of households affected can vary considerably by state and city, depending on income distribution and local new-home prices. The biggest impact is in Texas, where more than 18,000 households could be sidelined if median new-home prices increase by $1,000. On the other hand, Wyoming has the lowest impact: The same price rise would disqualify only 313 buyers, the study shows.
On the metro level, those where a $1,000 increase could possibly price out the most potential buyers are the New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa. area; Houston-Sugar Land-Baytown, Texas; Atlanta-Sandy Springs-Marietta, Ga.; and Las Vegas-Paradise, Nev.