Month: August 2025

I asked Grok the following question, but you can try it yourself with other AI platforms. “Over the last 30 years, how much has the cost of local and state fees and regulations increased, on a percentage basis? Please provide some examples.”

For full disclosure, I have my own opinions on this question, and like most questions I ask AI, I want AI to comb through available information on various subjects to see if I am an outlier. In this case, Grok agrees with me, so below is exactly as Grok responded. Grok uses the state of Washington as an example, where I would have used California, which I think is more outrageous. Not surprisingly, Grok uses prior posts and studies by NAHB.org. These are fees that home buyers are forced to pay, and I think the state entities need to show how they benefit home ownership in their state. But my guess is they go directly to the general fund.

“Quantifying the exact percentage increase in the cost of local and state fees and regulations over the past 30 years is challenging due to limited comprehensive data spanning this period and the fragmented nature of regulatory costs across jurisdictions. However, available studies and industry reports, particularly from the National Association of Home Builders (NAHB) and related sources, provide some insight into the rising impact of these costs on housing, including common interest developments (CIDs) like condominiums and planned unit developments. Below is an analysis based on the most relevant data, focusing on the housing sector:

1. NAHB Estimates on Regulatory Costs:
   • 2021 NAHB Study: According to NAHB, government regulations (federal, state, and local) accounted for 23.8% of the price of a new single-family home in 2021 ($93,870 on a $397,300 home), with $41,330 attributed to development regulations (e.g., zoning approvals, impact fees) and $52,540 to construction regulations (e.g., building codes). Between 2016 and 2021, regulatory costs rose from $84,671 to $93,870, a 10.9% increase over five years.
   • Historical Context: NAHB’s earlier studies suggest regulatory costs were lower 30 years ago. A 1998 NAHB report estimated that regulations accounted for about 10% of home prices in some markets, implying a significant rise to 23.8% by 2021. While exact figures for 1995 are scarce, extrapolating from NAHB’s data and adjusting for inflation, the regulatory share of home prices has roughly doubled, suggesting a 100%–150% increase in regulatory cost impact over 30 years in nominal terms. This is driven by increasing fees (e.g., impact fees up to $150,000 per project in California) and stricter codes like energy efficiency standards.
2. Washington State Case Study:
   • The Building Industry Association of Washington (BIAW) reported in 2025 that local and state regulations account for 29.5% of a new home’s price ($203,976 on a $690,701 home), compared to NAHB’s national average of 23.8%. Since 2009, Washington’s state building codes, particularly the energy code, have added $39,876 to home costs, a 5.7% higher “regulatory inflation” rate than the national average. While BIAW’s data doesn’t cover 30 years, it notes a 200% increase in energy code-related costs since 2009, suggesting that specific regulatory categories have seen dramatic rises. Over 30 years, assuming a steady increase, Washington’s regulatory costs could have risen by 150%–200% in nominal terms, driven by layered requirements like the Washington State Energy Code.
3. Multifamily Development (CIDs):
   • A 2022 NAHB and National Multifamily Housing Council (NMHC) report found that regulations account for 40.6% of multifamily development costs (e.g., condominiums), with building code changes over the past 10 years contributing 11.1% of total costs. This is higher than single-family homes, reflecting the complexity of CIDs. While 30-year data is unavailable, the report suggests that regulatory costs for multifamily projects have grown faster than for single-family homes due to inclusionary zoning and environmental mandates. Estimating from the 1998 baseline (10%–15% regulatory share), the increase to 40.6% by 2022 implies a 170%–300% rise in regulatory cost impact over 30 years.
4. Broader Regulatory Trends:
   • The Mercatus Center’s 2023 analysis of Washington state’s regulatory landscape reported 201,634 restrictions in the Washington Administrative Code, with a 7.35% price increase attributed to regulation growth from 1997 to 2015. This suggests that regulatory costs have compounded significantly over time, potentially doubling or tripling in some sectors since 1995 when adjusted for inflation and regulatory accumulation.
   • Nationally, a 2016 Mercatus Center study estimated that federal regulation growth since 1980 reduced GDP growth by 0.8% annually, implying a cumulative economic drag that compounds state and local cost increases. While not specific to housing, this supports the industry’s claim of escalating regulatory burdens.
5. Challenges in Precise Quantification:
   • Direct 30-year data on local and state fees is sparse due to the fragmented regulatory landscape, as noted by Front Line Advisory Group. Costs vary by jurisdiction, and historical data before 2000 is rarely standardized.
   • Inflation adjustments complicate comparisons. Using the U.S. Bureau of Labor Statistics’ CPI Inflation Calculator, a $10,000 fee in 1995 would be $20,374 in 2025 dollars (104% increase due to inflation alone). Regulatory cost increases beyond inflation (e.g., new energy codes, impact fees) likely add another 50%–150% to the total, based on NAHB and BIAW estimates.

Estimated Percentage Increase:

• Combining these sources, the cost of local and state fees and regulations for housing has likely increased by 100%–200% in nominal terms (50%–100% in real, inflation-adjusted terms) over the past 30 years. This range accounts for:
  • The rise in regulatory share from ~10% of home prices in 1998 to 23.8% (single-family) and 40.6% (multifamily) by 2021–2022.
  • Specific cost drivers like energy codes (e.g., $39,876 added in Washington since 2009) and impact fees (up to $150,000 in California).
  • General regulatory accumulation, with states like Washington seeing 200% increases in specific code costs over shorter periods.
• The higher end (150%–200%) applies to high-regulation states like California and Washington, while the lower end (100%–150%) reflects national averages.

Industry Perspective:

• NAHB and CBIA argue that this cost escalation, driven by zoning, permitting, environmental reviews (e.g., CEQA in California), and impact fees, has exacerbated the affordability crisis. For example, California’s 2025 CEQA exemptions are seen as a response, but local resistance continues to inflate costs.
• Builders note that these increases disproportionately affect CIDs, where density requirements and shared amenities face stricter scrutiny, pushing developers to pass costs to consumers or abandon projects.

Limitations:

• Exact percentage increases vary by state and locality, and pre-2000 data is limited, relying on estimates and industry surveys.
• The figures above are illustrative, as BIAW notes, due to the complexity of attributing costs to specific regulations.

For further details, see NAHB’s reports at www.nahb.org or BIAW’s 2025 study at housingstudies.biaw.com. If you need a breakdown by state or specific regulation type, let me know”