Lack of land regulations keep new Houston homes affordable
November 9th, 2010 6:39am
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While many areas have instituted "growth management" strategies to limit urban sprawl, a new study says that a decided lack of regulations, along with low land prices, have helped make the initial costs for new Houston homes the lowest in the country.According to a report by Demographia, the cost of raw land and the regulations associated with building a new home have traditionally worked out to roughly 20 percent of the price of an entry-level home. In Houston, that works out to $13,200, an amount which local regulations do not add to, making it the lowest cost market of the 11 included in the study.
By contrast, the San Diego area has a very high regulation cost, which adds more than $220,000 to the cost of building a new home - costs which are passed from the builder to the buyer.
The lower costs also translated into attached homes, such as townhouses and condominiums, where the raw land and regulation costs were just $11,900, nearly $4,000 less than the next closest city in the study.
Despite the low cost, new home construction in Houston has remained slow. According to Metrostudy, local buyers purchased less than 5,400 new homes in the third quarter of the year as housing starts slumped to less than 4,000.
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