Texas, Florida, and similar rapidly growing red states are gaining an edge in the competition for newcomers. It’s not just about the attractions of lower taxes and favorable weather; these states are also adopting a more relaxed approach to housing regulations than many pricier areas.
As people and businesses keep moving south, it’s becoming clear that these burgeoning regions will need to step up their housing and infrastructure game. So far, southern states seem to be easing regulatory constraints to facilitate quicker construction of new buildings.
Industry experts believe that those southern states focusing on new development are in a good position to welcome the increasing population, while other areas bogged down by strict zoning laws and lengthy approval processes are struggling to boost their housing supply and maintain affordable prices.
Jim Tobin, who leads the National Association of Home Builders, highlighted that the desire to construct new buildings gives these states a significant competitive edge. He explained, “These economies are wide open. They’re drawing in more businesses, have overall lower taxes, and are making it a priority to build housing.” In a sense, they possess both the land and the determination to meet the housing demands created by new jobs.
This desire to grow is crucial as Americans migrate away from expensive coastal cities towards states with lower taxes. Yet, growing populations can strain infrastructure like roads and utilities. Housing experts argue that with the right investments in both infrastructure and housing construction, it’s possible to manage these new arrivals without worsening existing shortages.
Challenges certainly exist, particularly when infrastructure fails to keep pace with new housing developments. As Tobin mentioned, there are complaints about inadequate infrastructure failing to match the rapid increase in housing and population.
Even in states that are speeding up construction, costs remain a significant issue. The National Association of Home Builders points out that around 24% of the cost of a typical single-family home stems from government regulations—adding nearly $95,000 to the average price of a new home. This burden intensifies with apartment complexes, where regulations make up about 41% of the overall costs.
Policymakers in Washington are increasingly turning their attention to these rising costs, seeking strategies to improve housing supply and affordability. Tobin indicated that bipartisan efforts in Congress aim to motivate local governments to ease regulations and implement policies that facilitate new construction.
The urgency of this issue is highlighted by the economic concerns of many voters, especially as rising mortgage rates and limited inventory keep first-time buyers out of the market. During the upcoming midterm elections, tackling the housing crisis could be pivotal, with Tobin stating, “The answer to this country’s housing crisis is to increase supply. This bill will definitely help us build more supply at an affordable price.”
