As housing prices continue to skyrocket, the latest study from the Georgia Public Policy Foundation identifies the cost of regulatory compliance as a large factor. 

A Georgia Policy survey of developers and builders shows that regulations imposed by government at the federal, state and local levels account for nearly 27% of the final price of new single-family homes in Georgia, higher than the national average. 

“This study gives credibility to what we have been saying for some time,” said Bradley Jones, President of the Home Builders Association of Georgia. “Regulations are driving up the cost of housing and impacting the industry. We are facing a shortage of housing, not only in Georgia, but across the country. We understand we are facing labor shortages and supply shortages. However, regulatory barriers are drastically increasing the prices of a single-family home and this has consequences for housing affordability. I am afraid we could be looking at a home ownership crisis soon if the situation does not change.”

The study compares regulatory costs in both the lot-development and construction phases of building single-family homes, using the same methodology as a survey conducted periodically by the National Association of Home Builders. Georgia survey data showed that regulatory costs during the lot-development phase account for 11.3% of the final house price. Regulatory costs during the construction phase averaged 15.6% of the final house price. Combined, the total cost of regulation accounts for 26.9% of the final price of a newly built single-family home.

The national survey, conducted in March 2021, found regulatory costs accounted for 10.5% during lot development and 13.3% during construction, for a total regulatory cost of 23.8% of the final price of a new single-family home. The Georgia survey was conducted in October 2021.

"Georgia is a great place to call home, but too many Georgians find themselves unable to afford the home that's right for them,” said Kyle Wingfield, President and CEO of the Georgia Public Policy Foundation. “There are a lot of reasons for that, and there are a lot of people, especially in state and local governments, trying to do something about it. We wanted to look at the problem from a different angle and ask, is it possible the government is actually making the problem worse? These survey results indicate pretty strongly that the answer is yes.” 

"We don't believe the right answer is for the government to impose zero costs on builders and homeowners, because that would probably just result in taxpayers footing the bill for some services that are included.“ Wingfield continued, “But it seems equally unreasonable for regulatory costs to represent more than a quarter of the cost of a new home. We invite those who are working on the problem of housing affordability to join us in asking our state and local governments to promise the same thing for housing that doctors do for our health: First, do no harm."

The full study is available on georgiapolicy.org.