Breaking The Silence

I’ve been self-employed for ten years, and in that time I’ve written exactly zero letters to the editor of our local paper. Too much chance of annoying a potential or existing client. But last week something in the business section really stuck in my craw, and I wrote a letter. This morning at 8:30 I received a voicemail from a random reader thanking me for thinking that way and taking action. So I guess they printed it. Though I don’t know what was edited, here’s what I submitted.
Your lengthy and reasonably balanced story from Sunday, May 8 titled “Battling the Regulatory Bottleneck” provided some interesting perspective on how we think about housing and government.
As reported, the average price of homes at the new Prospect Hill development will be $250,000 to $400,000. Had there been no “regulatory bottleneck” there would have been “some” houses affordable for families earning less than $70,000 per year. Whether there would have been two, 20, or 130 of these affordable homes, and what their price might have been, we do not know.
An important fact comes at the very end of the article: The regulatory approval process for Prospect Hill cost $225,000. And the penalty: “All of those expenses will be reflected in the sales prices of the homes, [the developers] said.”
$225,000 sounds like a lot of money, but let’s do some math. With 170 houses approved, it’s only $1,324 per house, about one-half of a percent on a $250,000 house, or one-third of a percent on a $400,000 house. That $1,324 is put into a 30-year mortgage for an annual cost of approximately $44.
Now, tell me again, why are these houses are going to cost a third of a million dollars? It might be because of land cost, or maybe due to materials cost, or perhaps labor cost, and let’s not forget the “cost” of developer profit – but it’s certainly not due to the cost of $1,324 for regulatory approval. The headline of your article could be accurately written as, “Developers: Delays boost prices over half a percent!”
Let’s not try to blame the lack of affordable housing on the public review process. I am happy to pay $44 per year for this public good. If instead I wanted to live where no one cared about protecting natural beauty I could find a cheap place in Houston Texas.