Should government play a role in regulating housing prices?
As the Seattle metropolitan area quickly becomes one of the most expensive places to live in the nation, many prospective buyers worry about finding housing that is within their price range.
A recent New York Times column argued that government regulation was the only way to make housing affordable and keep people from being priced out of their own city.
But Charlie Conner, founder of Seattle-area developer Conner Homes, finds that government involvement only drives costs for developers up — and those costs are passed right on to the consumer.
“What do we need to do to create value for consumers and value for society?” he said. “Let’s make the entitlement and the building process as efficient as possible.”
Conner is the second generation in his family to go into housing development, after his father started the business in the 1950s. Throughout the years, he said he has seen the process of building homes get longer and more complicated thanks to increased government requirements.
For example, the 1990 Growth Management Act of King County established the urban growth area by drawing a line between land that can be developed, and land that must be preserved as nature.
“You have large swaths of land between the employment centers and the population centers now that are kind of off-limits,” Conner explained. “So what it’s done is, it’s artificially constricted the supply of land.”
Zoning and land use regulations, along with the influence of homeowners who want to slow development, have also limited development and thus driven costs up.
“That means my children can’t really afford to live where I grew up,” Conner said. “They’ve got to move further out to where that affordable housing is if they want a single-family residence.”
Every hoop that government requires developers to jump through — every permit, every inspection — drives up the cost of housing, Conner said. However, he believes a point of limited returns is reached, and that the quality of housing could still be attained without such a lengthy process.
“In the end, largely, the home and the community is no different than it would have been had it been approved and built on a faster basis … it just added years to the process, and the cost of all the consultants,” Conner said.
It is those consultants, along with bankers and attorneys, who are pocketing the difference, he said.
He also pointed out, the longer it takes to build a development, the more that housing costs go up with inevitable inflation and demand.
“I’m building a community that, had we been approved on a reasonable schedule … we would have been building the community three of four years ago,” he said. “In that time, the price range has gone up probably 30 percent due to market demand.”
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