According to the latest National Association of Home Builders report, most millennials can’t afford to buy a new house! 

While we may be unable to control the interest rates and supply chain issues, all hope is not lost. We have the power to make a difference. By arming ourselves with knowledge of the home building processes and factors that affect the cost of new homes, we can be the wave of change needed to make homes more affordable.

Permitting in the Home Building Process

The period after the property is purchased but before the home is built is known as the “pre-construction” phase. In the pre-construction phase of any building, residential or commercial, builders must have the building site evaluated, submit building permits, meet inspection requirements and address any other unique situations that must be resolved before or during construction. As such, the timeline of the pre-construction phase can vary widely depending on where the home is being built.

How do delays affect the cost of a home? 

Delays in permitting at the pre-construction phase cost home builders – and in turn, home buyers – thousands of dollars on each home. Statewide, the average permit delay is 6.5 months, resulting in holding costs of $26,298. Here are five ways these delays drive up the cost of a home: 

• Financing payments
• Property taxes
• Insurance
• Trash collection
• Homeowners association or condo fees

Why do permits take so long? 

While builders must make sure they are filling out forms and applications with accurate information to prevent returned or denied permits, other factors result in delays, including:

• Staffing issues at the jurisdiction slowing the process
• Jurisdictions requiring more information than is necessary for the scope of the project
• Redundant and unnecessary internal processes (such as requiring multiple people to sign off on the same permit)
• Bottlenecks in the permitting process (such as not allowing multiple permit reviews to be completed for a project simultaneously)
• Outdated technology (requiring paper or PDF applications that can easily get lost, damaged or misplaced)

With every $1,000 added to the cost of a newly built home, an additional 2,200 families are priced-out of the opportunity to own a home (National Association of Home Builders, Priced-Out Estimates 2022). This means that permit delays in the state prevent 57,855 families (an estimated 76%) from purchasing a home and securing a better future for themselves. 

To ensure we can access homes without a substantial cost burden (more than 30% of monthly income is spent on housing), we need to urge our local jurisdictions to undergo internal retrospection, identifying process flaws that hinder permit approvals and drive-up home prices. 

It's time to accelerate permit timelines, innovate on land use policies and alleviate hidden fees. 

Watch our video for more ideas, then sign up for the #CutTheCosts newsletter to stay up to date on the latest information on how you can join the fight in making homes affordable for all.