Really appreciate the breakdown here — regulatory friction absolutely raises the cost of new construction. But there’s still a gap this explanation doesn’t fully close.
Permitting delays and impact fees make new homes more expensive.
But they don’t explain why existing homes doubled or tripled in price in markets with no new construction at all.
What changed after 2000 wasn’t just supply…it was the financing.
HELOC-to-down-payment loops
DSCR loans based on projected rent
Cross-collateralization
Investors using leverage to buy 3–5 homes while families try to buy one
Leverage went vertical, and prices detached from wages.
Regulatory reform matters — but without addressing the way credit fuels demand, the underlying pressure stays the same.
I think both sides of the equation matter, but the demand-side leverage story is a big part of why this decade looked so different from the 1950s–1990s.
So frustrating! The same thing is happening with vehicles. You can't build a car without computers, camera, bells and whistles. It's illegal. So the prices are crazy. Our government is way too bloated.
Brilliant breakdown of the bureaucracy premium. The $56,000 signature is such a vivid way to frame wasted capital that never touches wood or labor. Most people blame market forces when the real bottleneck is administrative friction compounding over time. The Austin example proves that deregulating works faster tahn tax incentives or subsidy programs ever could.
My theory is that the govt is at fault but in a different way. The govt provides excessive credit through Fannie and Freddie, so banks are giving loans to questionable buyers “only” because Fannie and Freddie or really the government will backstop the mortgage if the person defaults on the loan. If we got rid of Fannie and Freddie the banks would be more cautious with mortgages bringing down the demand for housing and bringing us back to the good ole days in this country.
This is correct, but misses an important point. There are MANY young people who would buy those tiny, crappy houses for 200-300K if they were being built, and they would even be willing to drive pretty far: just look at edgewater drive in santa clarita as an example for what I mean. But the inventory of homes like this is absolutely tiny, and no one is building them because they just aren't profitable for builders to build.
Really appreciate the breakdown here — regulatory friction absolutely raises the cost of new construction. But there’s still a gap this explanation doesn’t fully close.
Permitting delays and impact fees make new homes more expensive.
But they don’t explain why existing homes doubled or tripled in price in markets with no new construction at all.
What changed after 2000 wasn’t just supply…it was the financing.
HELOC-to-down-payment loops
DSCR loans based on projected rent
Cross-collateralization
Investors using leverage to buy 3–5 homes while families try to buy one
Leverage went vertical, and prices detached from wages.
Regulatory reform matters — but without addressing the way credit fuels demand, the underlying pressure stays the same.
I think both sides of the equation matter, but the demand-side leverage story is a big part of why this decade looked so different from the 1950s–1990s.
So frustrating! The same thing is happening with vehicles. You can't build a car without computers, camera, bells and whistles. It's illegal. So the prices are crazy. Our government is way too bloated.
Brilliant breakdown of the bureaucracy premium. The $56,000 signature is such a vivid way to frame wasted capital that never touches wood or labor. Most people blame market forces when the real bottleneck is administrative friction compounding over time. The Austin example proves that deregulating works faster tahn tax incentives or subsidy programs ever could.
Great data. Keep up the good work. We intend to build our next home so its nice to set expectations. (3500-4k squ/ft range)
Graham - I agree it is red tape.
Everything the government sticks their hands in gets worse and more expensive.
How can politicians win on freeing the markets when some politicians promise 'free' everything to everyone all the time?
Thanks for continuing to educate people, and myself!
My theory is that the govt is at fault but in a different way. The govt provides excessive credit through Fannie and Freddie, so banks are giving loans to questionable buyers “only” because Fannie and Freddie or really the government will backstop the mortgage if the person defaults on the loan. If we got rid of Fannie and Freddie the banks would be more cautious with mortgages bringing down the demand for housing and bringing us back to the good ole days in this country.
This is correct, but misses an important point. There are MANY young people who would buy those tiny, crappy houses for 200-300K if they were being built, and they would even be willing to drive pretty far: just look at edgewater drive in santa clarita as an example for what I mean. But the inventory of homes like this is absolutely tiny, and no one is building them because they just aren't profitable for builders to build.
I could tell you 30+ years worth of stories related to the cost of red tape.
Love the content but I’d rather watch the YouTube video! Haha
Can you ever recall a fee being eliminated?
Great write up and use of very apples to apples comparison . Everything is relative so tho is refreshing to read