Did you know that the rising cost of housing has been a growing concern amongst Americans, particularly those wishing to become first-time home buyers? Sadly, fewer Americans believe now is a good time to buy a home than those who believed this during the Great Recession.
Think about that.
It’s no wonder that housing costs and affordability are a challenge municipalities and state governments are examining.
The Wisconsin Institute for Law & Liberty (WILL) issued a new policy report, Priced Out of House and Home: How Laws and Regulation Add to Housing Prices in Wisconsin and we encourage Minnesota elected officials to check it out. The report explores government regulations and considers its negative impact on the cost of home prices in Wisconsin.
This report by WILL not only highlights the key ailments, but it also makes recommendations for Wisconsin local and state governments to consider. Minnesota lawmakers should pay attention.
- Government adds approximately $88,500 to the average cost of each new-built home in the Midwest. Based on national data on the cost of regulation, and regional data on the cost of new homes, this figure represents more than a quarter of the cost of the average new home.
- The regulatory hoops before new construction can begin are extensive. A survey of Wisconsin builders found that the average development takes 14 months to even begin construction. Much of this is due to a tangled web of regulations where development can be stopped at every term.
- Hyper-local control obstructs affordable market-rate housing and the exercise of property rights. National research shows that most people are supportive of the development of affordable housing, so long as it is not in their backyard. The more opportunities for community input on a particular project, the less likely it is that the project will reach completion.
- “Pro-environment” policies often worsen sprawl and pollution. Requirements for extensive green space in a development sound good on paper, but limit the density of new developments. This increases urban sprawl as people must move further and further out to find an affordable home.
Policy Recommendations: Based on the findings of this report, WILL recommends the following to Wisconsin policymakers at both the state and local level:
- More “by-right” zoning. “By-right” zoning leads to the creation of community-wide standards on what sort of building can and cannot be allowed. It limits the ability for “hyper-localism” to stymy new development of projects outside of those standards.
- Decrease or eliminate minimum lot sizes and minimum setbacks. These policies limit supply, hike prices, and encourage sprawl. We should allow the market to decide how big lots must be to meet consumer demand.
- Encourage “missing middle” housing. It’s become typical to only allow the building of low-density housing, often standalone single-family housing; even though denser and more affordable types of homes, like duplexes, used to be a more prominent form of housing in Wisconsin. These types of housing that fill in the “middle” between rented apartments and large single-family homes allow for greater density, while also potentially providing another source of income (from renters) to the working-class homeowner.
- Create transparency in the process for approvals and rejections. The level of subjectivity and opacity in the municipal evaluations of individual development proposals leads to unpredictability; and, often the appearance of incompetence or impropriety. Setting clear standards on areas, such as green-space requirements and fees to which the developer will be subjected to, will work to streamline the process.
Check out this report here.