Housing Affordability Requires More Than New Construction. It Requires Smarter Regulatory Systems.
In a recent episode of Everyday Economics, Professor Henry Thomson discussed some of the factors impacting housing affordability. A recent study in Nebraska supported Thomson’s conclusions and offers insights into how regulations are affecting Omaha residents.
Housing affordability remains one of the most pressing challenges facing communities across Nebraska and the nation. While rising interest rates, labor shortages, and material costs often dominate the conversation, emerging research points to another important factor that deserves attention: the cumulative cost of regulations, standards, and delays that influence the price of building a home.
Meaningful solutions begin with understanding the full picture. That's why we focused on strengthening research, engaging stakeholders, and fostering productive conversations about the barriers and opportunities shaping housing affordability across our region.
A 2023 study conducted by the University of Nebraska at Omaha was commissioned to examine the costs of government regulation on the construction of single-family homes in the Omaha metropolitan area. Data was drawn primarily from a survey of homebuilders working on new home construction in the City of Omaha and neighboring communities. The study concluded that government regulations account for an estimated 32.8% of the cost of constructing a new single-family home in the Omaha metropolitan area. This is significantly higher than the national average of 21.5% that was attributed to regulatory compliance costs at approximately the same time period. The study found that regulatory compliance costs added approximately $94,834 to the price of a newly constructed home in Omaha, compared to $52,540 attributed to government regulatory compliance costs nationally.
What the Research Tells Us
Several categories of regulatory costs that impact residential construction were examined. These included permit and inspection fees, changes to building codes, architectural design requirements, labor regulations, and delays associated with compliance and approvals. Researchers found that the largest cost drivers were:
- Changes in construction codes and standards
- Architectural design standards that exceed typical industry practice
- Delays associated with infrastructure and utility connections
In particular, the homebuilders who responded to a research study reported that code changes and additional design requirements represented costs substantially higher than national averages. The study determined that, from the $94,834 total regulatory construction costs to build a new home in the Omaha metropolitan area, changes in construction codes and locally imposed governmental construction standards alone comprised approximately $55,000 of that cost of a typical new home in the Omaha area.
Importantly, the study did not argue that all regulations should be eliminated. Rather, it asked an important question: Are there opportunities to achieve community goals while reducing unnecessary costs that ultimately make housing less attainable for working families?
Affordability Is a Community Challenge
The housing affordability conversation is often framed as a choice between growth and quality, or between development and community standards. The challenge is much more nuanced.
Communities need safe homes. They need thoughtful planning. They need infrastructure that supports long-term growth. At the same time, every additional requirement, review process, and delay carries a cost that eventually shows up in the final purchase price.
When housing costs continue to rise faster than household incomes, the impacts ripple throughout the community. Young professionals delay homeownership. Families have fewer options. Employers struggle to attract and retain talent. Economic mobility becomes more difficult.
That is why affordability should not be viewed solely as a housing issue. It is also a workforce issue, an economic development issue, and a quality-of-life issue. A separate University of Nebraska’s Center for Public Affairs Research brief on Housing Availability and Quality in Nebraska also concluded that housing availability and affordability recently had become a top reason Nebraskans cited for moving decisions.
The Role of Collaboration
One of the most valuable takeaways from this research is that solutions do not require choosing sides. Instead, they require collaboration among public officials, utilities, homebuilders, employers, community organizations, and residents.
The study identified opportunities to evaluate permitting timelines, utility infrastructure processes, staffing levels, zoning approaches, and housing design requirements. Builders interviewed for the research frequently cited delays associated with utility connections and planning approvals as areas where efficiency improvements could help reduce costs without compromising safety or quality.
These conversations are precisely why partnerships organizations such as Citizens For Free Enterprise are so important. Bringing together research, lived experience, and policy expertise allows communities to move beyond assumptions and focus on practical solutions.
Moving Forward
Housing affordability does not emerge overnight, and the issue will not be solved through any single policy change. However, studies and surveys of homebuilders that take the time to examine compliance costs provide valuable insight into where costs are occurring and where thoughtful reforms may create opportunities for greater affordability.
As highlighted in our recent video, addressing housing affordability requires a willingness to ask difficult questions, challenge outdated assumptions, and work together across sectors. The goal is not simply to build more housing. It is to create pathways for more people to access safe, quality homes and apartments that they can afford. The affordability challenge is complex, but with informed leadership and collaborative action, meaningful progress is possible.