Last week, economists at the Fermanian Business & Economic Institute released a report estimating that government regulation increase San Diego housing prices–for both buyers and renters–by an average of about 40 percent. The report says that only 16 percent of San Diego County has been developed (the 2010 census says 18.5 percent), and almost all of the remaining land is off-limits to homebuilders. Yet, the report notes, a significant portion of that land “is geographically suitable for development.”
Although the land shortage is responsible for much of the regulatory cost, there are other costs as well. “The time involved in what is often a prolonged and complicated process . . . can add 15% or more to the price of a new house,” or more than a third of the total regulatory cost, says the report. This process can take 12 years or more before developers can start building a single home. Of course, the Antiplanner has argued that cities can only get away with imposing such an onerous process if they have shut off most vacant land from development through urban-growth boundaries and other regulatory tools.
