As more and more attention is being paid nationally to the crisis of housing affordability, local land use regulations and processes are getting a lot of the spotlight, along with the expected price drivers like the cost of land, materials, labor, interest rates, etc.

One of the latest in a national publication is Why Your House Was So Expensive in The Atlantic early this week.  The subtitle for the story is “Material-cost inflation, anti-building rules, NIMBY attitudes, and barriers to innovation have created a housing-affordability crisis,” but author Derek Thompson notes:

So the short answer to the question “Why is it so expensive to build a house in America?” is: There is no short answer. Housing costs are complex because nearly half the cost comes from local rules and preferences rather than just materials and labor.

Wow, half the costs, he reckons.  On the regulations side, Thompson does talk about zoning and rules that limit numbers and sizes of homes.  But he figures that something else from local jurisdictions adds even more costs:

The most significant and pointless factor driving up construction costs was the length of time it takes for a project to get through the city permitting and development.

Besides the local regulations that are in place that limit housing, Thompson then pays particular attention to the processes local governments have for getting new projects approved or the rules changed, which allow or call for public input.  He says,

Researchers sometimes call this phenomenon “citizen voice.” Because I’m fond of both citizens and voices, I don’t like this term. I prefer vetocracy—rule by veto—which is Francis Fukuyama’s phrase for systems that empower minority objectors to stop anything from happening. Local vetocracy sounds appropriately vomitous to describe this situation.  Local vetocracy is expensive in two ways. It not only limits the supply of housing but also raises the cost of building.

Just as many housing rules are mildly defensible in isolation, you might say there’s nothing wrong with people offering feedback on construction that will affect their neighborhood. Isn’t this just democracy in action? Well, no. Democracy is government by the people—all of them. By contrast, local vetocracy is government by a very small group “yelling loudly with [their] lawyer on speed dial.”

Thompson sums up this situation thus:

When you turn over governance to the most litigious shouters, you implicitly allow older and richer homeowners to block construction for younger, poorer renters. That’s not a recipe for housing abundance. It’s a recipe for the status quo.

Watch out, folks, the knives are sharpening.