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Governors Urged to Take the Lead on Housing Affordability

Participating in a Sept. 21 housing panel discussion hosted by the Republican Governors Association in Las Vegas, NAHB President-elect Brian Catalde warned the governors to avoid following in the footsteps of California, whose excessive regulatory constraints have put a stranglehold on housing affordability in the state.

He also advised the governors not to get too caught up in the media hype on the hosuing market slowdown.

Governors Kenny Guinn from Nevada, Bill Owens from Colorado and Rick Perry from Texas, and gubernatorial candidates Rep. Bob Beauprez from Colorado and Rep. Jim Gibbons from Nevada listened to Catalde address the current state of the housing market, infrastructure financing alternatives, storm water regulations and regulatory barriers to affordable housing. Kathy Weiss, director of government affairs for Centex Homes, also addressed the governors.

As a developer in California, Catalde said he knows all too well how regulations are adding to home building costs.

“In my home state, it can take three to four years to get the entitlements you need to develop land for new homes,” he said. “Add the carrying costs of such parcels to the impact fees, concessions and severe restrictions on land use that we frequently encounter, and you easily understand why California has the costliest housing market of any state.”

The availability of developable lots has shrunk considerably as a result of the restrictions, he said, and the cost of land alone now constitutes a huge portion — 35% or more — of any new home in the state, he said.

Catalde said that it will take “real political will” to solve the problem, and he said that both Republican and Democratic governors can take the lead on the land-use issue, which is really a matter of providing workers with housing they can afford in neighborhoods that are close to their jobs.

Catalde provided the governors with copies of “Building for Tomorrow,” an NAHB publication that describes infrastructure financing alternatives that will enable communities to accommodate their housing needs.

On the nation’s cooling housing marketplace, Catalde noted that, “Some of the recent media reports are short on facts and long on wild-eyed speculation. To hear them tell it, the sky is falling and there’s nothing anyone can do about it. The fact is, the media always over-hypes the market on the way up and then exaggerates the doom and gloom on the way down.”

Catalde said that the record pace of sales and construction activity over the past four years, and annual price appreciation of 20% or more in some markets, was “unsustainable” and “bound to decline.”

“It is not, however, the end of the world,” Catalde said. Although it will be painful for builders and sellers in certain markets, he said, the extent of the decline in activity won’t be nearly as great as in the slowdowns of the early 1980s and 1990s, when starts and sales fell by more than 50%.

Builders Win Big in First Code Hearing Round

NAHB scored significant wins for construction design, safety, security and affordability at the annual meeting of the International Code Council in Orlando, Fla., where more than 2,200 code change proposals were presented for consideration.

After a grueling 11 days, each filled with 12 to 14 hours of code hearings, the arguments presented by NAHB staff and member volunteers resulted in favorable votes on a number of key proposals advocated by NAHB, manufacturers and other interest groups. Among the big victories:

Defeated proposals to increase the amount of wall insulation required by the IECC and IRC. The International Energy Conservation Code and the International Residential Code now require R-19 insulation in colder climate zones, but this could have been raised to R-21 or R-22. NAHB showed that the expected 20- to 25-year payback from these proposed changes was not worth the cost. NAHB Research Center figures show that the expected $400 to $500 cost of the higher insulation would result in only $10 to $15 a year in energy savings.
Defeated a proposal to require the installation of a permanently mounted escape ladder for every emergency escape and rescue window above the first floor. Promoted by ladder manufacturers and fire fighting groups as a life safety issue, NAHB successfully argued that the drawbacks of these ladders outweigh the benefits, with the dangers of falling and improper use, lack of product control and security issues — in addition to costs — making them a bad choice. These escape ladders would also limit furniture placement and present other design concerns.
Achieved approval of an NAHB proposal to reasonably address wind speed-up due to topographic features in the design of homes built on the tops of hills and ridges. The approved language significantly limits the application of wind speed-up effect requirements to local jurisdictions where there are documented, historical records of damage and where the changes in terrain are abrupt — for example, the mountains and valleys of the Hawaiian Islands or the high ridges along the Pacific coast. These requirements, under which houses must be engineered and built to costly hurricane-zone standards, are not justified in other areas, NAHB argued.
Defeated a proposal to incorporate requirements into the IRC for fire department access roads and fire protection water supply. NAHB successfully argued that because the proposal was not a construction issue but a community land planning and zoning issue, it should be determined by local zoning laws, taking into consideration community resources, such as fire department locations and access to water.
Defeated proposals to mandate fire sprinkler systems for all one- and two-family dwellings and townhouses in the IRC. NAHB based its arguments not on cost, but effectiveness. Study after study has demonstrated the overwhelming success of smoke alarms in preventing fire deaths; no such evidence exists for residential fire sprinklers, which are also fraught with installation and maintenance concerns. Fire sprinkler requirements remain in the appendix rather in the main body of the document.
Defeated a proposal to increase by 1 foot the height to which homes in floodplains must be elevated above the 100-year floodplain elevation. The Federal Emergency Management Agency wanted to raise the height of new homes above the elevation required by the National Flood Insurance Program. NAHB successfully argued that the additional cost of construction would not provide any demonstrable benefit and additional “freeboard” requirements, like this proposal, should be left to local jurisdictions. The proposal would have applied to all coastal regions, including those near inland rivers, with an estimated cost of $3,000 to $4,000 for a $250,000 home.

NAHB was particularly concerned about the Great Plains and other regions where the floodplain can be extensive and not limited by the surrounding terrain. NAHB presented evidence from builders in the Great Plains showing that they would not receive the insurance discounts common in hurricane-prone regions that would make the elevation requirements more cost-effective.
Achieved approval of a number of proposals to reorganize, simplify and provide greater flexibility in the IRC provisions for the design and construction of wood-framed wall bracing. NAHB worked with the ICC Ad Hoc Committee on Wall Bracing to resolve thorny problems in the current provisions. Most notably, it jettisoned a requirement to fully sheathe an entire dwelling with wood structural panels in order to be allowed to use the continuous sheathing method on one braced wall line.

Officials dropped a similar requirement for narrow wall bracing panels constructed at garage doors and added new or improved details for corner returns, tie-downs, wall offsets and angled walls. These changes will reduce construction costs by giving builders more options for providing braced wall panels and using alternative products, like gypsum and foam sheathing, in low-hazard regions.
Defeated proposals to boost the need to install roof truss/rafter hold-downs (hurricane clips). The proposals would have eliminated toe-nailing of trusses and rafters to wall framing except in small houses in low-wind regions. For roof trusses, attachments would have to have been designed to the uplift loads provided on the truss design drawings. In certain cases, these loads are conservative and would increase the connection requirements.

NAHB is now back at the drawing board, working with the Wood Truss Council of America, the Institute for Business and Home Safety and similar advocacy groups to devise a way to cost-effectively address roof uplift concerns.
Defeated proposals to require hail impact-resistant shingles and other roof coverings in many areas of the Central and Southern U.S. NAHB achieved a significant victory for consumers by blocking this proposal, again demonstrating the association’s advocacy for affordable homes. Supporters of the proposal did not provide any evidence that home owners would receive sufficient insurance discounts to offset the additional costs.
Defeated proposals that would have limited the use of vinyl siding, gypsum sheathing and foam plastic sheathing. The proposals would have required the engineered design of siding and sheathing products rather than laboratory testing, and would have ruled out the use of vinyl siding over gypsum and foam plastic sheathing. The proposals did not recognize the excellent performance of these products in low-wind regions when they are properly specified and installed.

NAHB teamed with the Vinyl Siding Institute and the Foam Sheathing Coalition to defeat these proposals and instead introduce specific changes to vinyl siding attachment details to ensure proper performance. Where appropriate, gypsum and foam sheathing can still be used to enhance the energy efficiency and moisture resistance of homes.
Defeated proposals to mandate carbon monoxide detectors in new homes. CO mandates should stay out of the residential building code until they have been proven to operate reliably, NAHB argued. Current technology is not sophisticated and accurate enough, resulting in false alarms and alarm failures, increasing the burden on emergency fire response and threatening lives. Further, manufacturers and other advocates have not yet agreed on guidance on where detectors should be installed for maximum effectiveness.

While NAHB was satisfied with its record of successful advocacy efforts, staff and members were disappointed that other proposals did not go as well for home builders.

For example, NAHB did not gain approval for a proposal added during the 2004 to 2005 cycle to eliminate very costly and onerous requirements for anchorage at the top of basement walls.

The requirements were based solely on the calculated capacity of the anchor bolts and sill plate and did not consider the historical performance of the current standard practice for anchoring the top basement walls to the framing, where few failures have occurred, NAHB argued.

A successful floor action for “approval as submitted” ensures that this item will be on the agenda for the Final Action Hearings in Rochester, N.Y. in May.

NAHB also did not get approval for a proposal to allow the use of the wind exposure category that results when all homes in a housing development are completed, instead of the exposure that exists when each individual house is constructed. Some jurisdictions allow this now, but it is not specifically addressed by the IRC. NAHB plans to modify its proposal to address the reasons given for disapproval and will submit the modified proposal for reconsideration at the final hearings.

Overall, with significant victories on these issues and others, NAHB and future home buyers were big winners at this first round of code hearings.

Web Training Focuses on Storm Water Management

The International Erosion Control Association is offering Web-based training for builders, developers and engineers interested in learning more about storm water Best Management Practices (BMPs).

“Stormwater BMP Maintenance” continues this week, while upcoming sessions will cover stream assessment and monitoring, storm water pollution prevention plans and enforcement information.

The BMP maintenance classes include information on plant selection, weed control, cleaning, sediment and debris removal and more.

The assessment classes include information on functions and processes that are critical to stream health and that enable building industry professionals to conduct assessment, monitoring, inventory and inspection duties and to make the permit process more clear.

Class registration information is available at the IECA Web training site.

NAHB Works to Soften the Blow of New Lumber Pact

Five days after U.S. Trade Representative Susan Schwab and Canadian Trade Minister David Emerson signed a softwood lumber accord establishing a complex system of quotas and new tariffs artificially boosting prices during periods of normal or weak demand for the building material, NAHB formally instituted new policy to help builders once the pact goes into effect.

On Sept. 17, the NAHB Board of Directors approved a resolution during its fall meeting in Salt Lake City that calls on the association to “work with the U.S. government, governments of other countries and industry to promote additional opportunities for NAHB members to obtain access to high-quality, stable and affordable supplies of lumber and other key building materials.” The resolution also calls on the U.S. Congress and the Bush Administration to eliminate all artificial economic trade barriers that discourage the use of imported or alternative building materials in the marketplace and urges NAHB to investigate how it can help builders access new technologies, innovations in home construction and alternative building materials that will provide consumers with more affordable housing. This new policy will supplement NAHB’s long-standing efforts to expand domestic timber supply.

To implement the new policy, NAHB is working to increase imports from Europe. Next month, NAHB Immediate Past President David Wilson and Executive Vice President Jerry Howard will travel to Russia to meet with industry representatives, establish contacts with producers and identify any policy barriers to increasing the volume of imports from their current level. A similar trade mission is planned later this fall to Sweden. In addition, the NAHB Research Center is promoting the use of steel, cement, engineered wood products and other alternative building materials wherever practical.

The new seven-year lumber pact, which is expected to be ratified by the Canadian parliament shortly and take effect as early as next month, would subject Canadian imports to a combination of export taxes ranging from 5%-15% and volume limits when prices fall below $355 per 1,000 board feet. If the pact were in effect today, Canadian lumber producers would be paying duties of 15% — the maximum stipulated — because current prices are well below the $315 per 1,000 board feet threshold that is part of the complicated system of export taxes and quotas based on market prices.

Lawmakers Hold Hearings on Tax Reform

The Senate Finance Committee last week held the second in a series of hearings on tax reform. The hearing focused on how to improve the current tax system by reducing complexity, increasing competitiveness and promoting "sensible" tax policy. Witnesses representing the business community generally agreed that lower rates were preferable to tax preferences like expensing. They also expressed concerns about the process of tax reform, particularly relating to the transition costs associated with radical changes in the tax code.

Ranking Member Max Baucus (D-MT) suggested that the right approach to tax reform would be to follow the model used by former President Ronald Reagan to address Social Security reform in which a bipartisan, congressionally appointed task force came up with a plan that was then agreed to by both political parties. Rep. Frank Wolf (R-VA) and Senator George Voinovich (R-OH) have introduced legislation (H.R. 5552/S. 3491) along these lines in both chambers that would reform both the nation's tax system and federal entitlement programs.

Congressional hearings on tax reform continue this week when the House Ways and Means Committee hosts a hearing on congressional tax reform proposals introduced in the 109th Congress. NAHB continues to monitor these discussions, weighing in where appropriate.

House Acts on Border Security

The House and Senate are continuing to move forward with several border security bills, as lawmakers from both chambers seek to address some component of the immigration issue prior to adjourning at the end of this week to campaign for the November elections. The House on Sept. 14 passed HR 6061, the “Secure Fence Act,” by a vote of 283-138. The Senate this week is expected to consider the measure, which would authorize the construction of 700 miles of fencing along the U.S.-Mexican border.

The House also approved several other bills last week: H.R. 4830, which would prohibit the unauthorized construction or use of a tunnel or subterranean passageway between the U.S. and another country; H.R. 6094, which would restore the Secretary of Homeland Security's authority to detain dangerous aliens, to deport criminal aliens and combat alien gang crime; and H.R. 6095, which would affirm the inherent authority of state and local law enforcement to assist in the enforcement of immigration laws, to provide for effective prosecution of alien smugglers and to reform immigration litigation procedures. It is unknown whether the Senate will consider these bills prior to adjourning for the October recess.

None of the legislation scheduled for consideration in the House and Senate contains provisions other than those targeted specifically toward border enforcement and border security. Further, it is not expected that the House and Senate will be able to reach an agreement on any type of guest worker or illegal immigrant visa provisions this year. To view the legislation, click here and type the respective bill number in the box in the center screen.

Builders are reacting to consumer uncertainty
about the direction of the nation's housing markets by adjusting their expectations downward and adopting a much more cautious approach.

This was apparent with the latest reading of the NAHB/Wells Fargo Housing Market Index (HMI), released Aug. 15, which showed a seven-point slide in builder confidence to the lowest level –32– since February of 1991. According to NAHB Chief Economist David Seiders, two big factors are coloring builders' perceptions of the market right now — rising sales cancellations and substantial growth in inventories of both new and existing homes. These factors are largely the result of an increasing number of potential buyers adopting a "wait-and-see" attitude. All three components of the HMI declined this month. The index gauging current sales of new single-family homes declined seven points to 36, while the indexes gauging sales expectations for the next six months and traffic of prospective buyers each fell six points, to 40 and 21, respectively, on a scale where anything over 50 indicates more builders view conditions as good than poor.

A 2.5% decline in July housing starts

The decline was the latest indication of an orderly cooling process that continues in the nation's housing markets. The decline, reported by the Census Department on Aug. 16, resulted in a seasonally adjusted annual rate of 1.795 million units for July. Single-family starts fell 2.3% while multifamily starts fell 3.4%. Meanwhile, issuance of building permits – which can be an indicator of future building activity – declined 6.5% overall on a 6.1% decline in single-family permits and a 7.7% decline in multifamily permits. The Midwest was the only region that did not record a decline in housing starts for the latest month. NAHB Chief Economist David Seiders noted that his forecast projects the downswing in starts and permits will continue for several months, but he also expects that solid economic fundamentals, a favorable financing climate, and widespread use of sales incentives will help limit the degree of the decline. A 9.4% decline in total starts is predicted for all of 2006, with single-family starts off by 10.8% from 2005's unsustainable level.

Storm water legislation now pending in Congress

This legislation needs your support and that of your federal representative. NAHB is asking all our members to please contact their members of Congress and ask them to cosponsor H.R. 5558, the Stormwater Enforcement and Permitting Act. This legislation would update and improve the EPA's implementation and enforcement of the permitting program for storm water discharges from residential construction sites, reduce your costs and the regulatory burden placed on your business, and simplify compliance. For more information, please visit www.nahb.org

Senate Democrats Block Estate Tax “Trifecta” Bill

By a 56-42 vote, the Senate last week defeated a motion to proceed to vote on H.R. 5970, the Estate Tax and Extension of Tax Relief Act of 2006. Senate Democrats led the way in blocking consideration of the measure, which needed 60 votes to move forward. Dubbed the “trifecta” bill, the legislation would have provided permanent estate tax relief, increased the minimum wage and extended numerous expiring business tax breaks.

Although the bill was approved by the House on July 28, Senate Democrats objected to linking a vote on boosting the minimum wage with estate tax relief. Senators from both parties expressed an interest in moving a set of tax break extensions separately after returning from their August recess, but the fate of a tax cut package remains unclear.

Prior to the Senate vote, NAHB sent a letter to Senate Majority Leader Bill Frist (R-TN) in support of the bill and also delivered a follow-up letter to every Senator stating the association would consider invoking cloture on the motion to proceed with the bill as a “key vote.” In a procedural move, Frist changed his vote to “no” so that he would retain his right under the rules of the Senate to bring the bill up again in the future. Senate leadership has indicated it would like to bring the legislation back to the Senate floor in the fall, although it remains uncertain if this will occur due to the limited number of the days the Senate will be in session prior to the fall election.

Full Senate Vote on GSE Bill Remains Uncertain

During consideration of a credit-rating agency reform bill in the Senate Banking Committee last week, Senators Chuck Hagel (R-NE) and John Sununu (R-NH) drafted two amendments aimed at altering how credit-rating agencies deal with the housing government-sponsored enterprises (GSEs). The amendments would have had the effect of forcing credit-rating agencies to not base their GSE ratings on any “implicit” guarantee of government support. The amendments were ultimately withdrawn after Senator Paul Sarbanes (D-MD) raised concerns about having Congress dictate how rating agencies conduct their business.

While the amendments were expected to be withdrawn, the markup once again gave GSE critics the opportunity to vocalize support for Senate debate on the committee-passed GSE reform bill S. 190. While Senate Banking Committee Chairman Richard Shelby (R-AL) still maintains that there is time to pass comprehensive GSE reform legislation before the fall elections, several other Senators expressed skepticism because Shelby has yet to offer any specific compromise with Senate Democrats to bridge the partisan divide on this legislation.

In other GSE news, Freddie Mac agreed last week, at the request of the Office of Federal Housing Oversight (OFHEO), to voluntarily limit the growth of its $710 billion of mortgage holdings to no more than 2% a year. The voluntary limit will expire once Freddie Mac resumes publishing regular quarterly financial reports. This temporary limit comes less than two months after Fannie Mae agreed to cap its mortgage portfolio at about $727 billion. While some have speculated that these voluntary portfolio limits could pave the way for a compromise on GSE reform legislation, others point out that this only strengthens the arguments that OFHEO already has the tools and strength necessary to properly regulate the housing GSEs.

Senate Panel Discusses Supreme Court Wetlands Cases

The Senate Subcommittee on Fisheries, Wildlife and Water last week held a hearing on interpreting the effect of the U.S. Supreme Court’s decision in Rapanos v. United States and Carabell v. U.S. Army Corps of Engineers on “waters of the United States.” In each case, the Corps asserted jurisdiction over the petitioners’ properties because the wetlands in question are adjacent to ditches, which the Corps classifies as tributaries. The Rapanos case concerns three separate Michigan properties, the Salzburg, Hines Road and Pine River sites. All three sites contain wetlands that are next to ditches or some type of stream. The Carabell property, also located in Michigan, contains a wetland that is separated from a man-made ditch by a berm.

The hearing broke down along predictable lines: the government witnesses committed to issuing interim guidance in the near-term as a result of the decision, but stopped short of committing to a full-blown rulemaking; the legal experts split on the exact meaning of the decision; and the stakeholders were split over the need for a legislative or regulatory fix. NAHB also is submitting testimony for the record.

Workforce Housing is Increasingly Costly

According to recent study by the Center for Housing Policy of the National Housing Conference. The report is called "Paycheck to Paycheck: Wages and the Cost of Housing in America," and it's a valuable resource for anyone seeking to advance the cause of affordable workforce housing. The study finds that the cost of a median-priced home increased 20%, to $225,000, between the final quarter of 2003 and the first quarter of 2005. Meanwhile, the annual income needed to qualify to purchase a home grew from $54,855 to $71,354. Importantly, this interactive, online resource allows you to cull average incomes for various professions and compare them to housing costs in 183 metro areas nationwide. For example, you can find out how much a police officer or teacher earns in the city of Tucson, AZ compared to what it costs to qualify for a mortgage on a typical home or to rent a one- or two-bedroom apartment in that city. You can sort by occupation (63 of which are represented in the study) or by metro area, and scroll down for a graph that gives you a clear visual representation of the challenges faced by working families seeking to either purchase or rent a decent home.

Local Regs Hammer Affordable Housing, Study Finds

Local government regulations can add as much as 30% to the cost of a new home, according to a recent study of development regulations in 187 cities and towns in eastern Massachusetts.

The study found that for each instance that communities increase minimum lot sizes by one-quarter of an acre, about 10% fewer homes are permitted. Fourteen municipalities in eastern Massachusetts zone more than 90% of their land area for two-acre lot sizes. Half of the municipalities zone at least one-acre lot sizes on more than half of their land area.

Two Massachusetts research organizations, the Pioneer Institute for Public Policy Research and Harvard’s Rappaport Institute for Greater Boston, jointly conducted the study and the results of the research are reported in “Regulation and the Rise of Housing Prices in Greater Boston.”

James Stergios, executive director of the Pioneer Institute, explained the research findings during a Jan. 12 press conference at the International Builders’ Show in Orlando, Fla. He was joined by Jeff Rhuda, business development manager for Symes Associates, Inc., a Massachusetts development company, and Layne Marceau, president of the Northern California Division of Shea Homes and chairman of the California Building Industry Association.

Marceau offered the perspective of builders and developers in California, one of the most heavily regulated states in the country.

“It has gotten to the point that more than 20% of the cost of new housing is regulatory costs,” Marceau said. “Some of these are hidden regulatory costs and some are very direct costs.”

Marceau pointed to an example of NIMBY-ism and ill-conceived land-use regulation in Livermore, Calif., where impact fees and regulatory costs now add $120,000 to the cost of every new home built. A proposed, moderate-density residential community in an area of Livermore that had been slated for development was put to a vote and rejected by the city’s citizens, 72% to 28%.

Instead, the developer must now subdivide the property into 20-acre lots, Marceau said, and, incredibly, still meet Livermore’s inclusionary housing requirement to make 30% of the housing affordable. That is difficult to do, Marceau pointed out, when the cost of each 20-acre lot is over $1 million.

Rhuda, speaking about the Massachusetts experience, said the high cost of housing is making it difficult for Massachusetts companies to attract and retain top employees.

“Massachusetts is one of the few states that have lost population the last two years in a row,” Rhuda said. “Businesses are saying that housing and healthcare costs are their two biggest concerns.”

Among the findings from the Pioneer/Rappaport report:

Housing prices in the Boston metropolitan area would be 23%-36% lower than they are now if the region’s housing stock had increased by the same rate in the 1990s that occurred from 1960 to 1975. The region’s housing stock increased by 27% during the earlier period, compared to only 9% in the 1990s.
One additional acre in a locality’s minimum lot size is associated with an 11.5%-13.8% increase in housing prices in that locality.
As minimum lot sizes increase by one acre, the share of homes that qualify as affordable drops by 8%-20%.

“There had been a lot of anecdotal evidence that regulations were a large and growing part of the cost of housing,” Stergios said. “We wanted to move past the anecdotes and compile the hard data that would show us the real cost of local regulations.”

This research model could be used to assess the impact of local regulations across the country, Stergios said.

In addition to this analysis, researchers at the Pioneer Institute and Rappaport Institute assembled and coded a database on zoning codes, subdivision requirements and environmental regulations that as of 2004 governed land use in the 187 communities within 50 miles of Boston. The database is an online catalogue that enables its users to view and compare regulations throughout the sample communities.

For more information, e-mail Blake Smith at NAHB, or call him at 800-368-5242 x8583.

Local Fees Contributing to Escalating Homes Prices

Escalating local fees are a major factor in rising house prices, adding up to 20% to the cost of of a new home today verses less than 5% a decade ago, according to NAHB Vice President/Treasurer Brian Catalde at the recent Pacific Coast Builders Conference (PCBC) in a presentation that was directly quoted in the May 27 edition of Financial Times.

At a PCBC press conference, Brian outlined four factors that home builders see as major drivers of home-price escalation, beyond the obvious strong buyer demand. First was the rising cost of doing business — particularly insurance costs that are being pushed upward by construction defect litigation. "Ten years ago I was building the same kind of homes that I'm building today. But I'm paying $10,000 more per home now than I was 10 years ago for general liability insurance," he explained. On a nationwide basis, GLI costs increase the cost of every new home by about $2,500.

A second contributor to higher home prices is "cost shifting," where new home buyers are forced to fund a variety of public needs and services. "In addition to roads and schools, impact fees are now being used by some local governments to pay for such things as public art, recreational facilities and jails," Bryan said. Impact fees in California typically run from $35,000 to $50,000 per home, and one jurisdiction has fees over $100,000 per home, he noted. A third big factor is production constraints, particularly those pertaining to land supply, such as large-lot zoning, setback requirements, urban growth boundaries and open space mandates. "When you add up all of these things, you've taken a tremendous amount of land out of circulation ... or you have a brutally inefficient use of land," said Bryan.

Finally, the costs of complying with hundreds of regulations raise the threshold for ownership by thousands of dollars per home. Brian cited the proposed IECC code change that would increase wall insulation requirements and result in about $1,000 more in home construction costs as just one example. The Financial Times piece that quoted Brian also cited several examples of unfair and excessive local fees and regulations as "the hidden dimension in the housing boom, adding heat to an already bubbling market in many areas."

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