In my previous post, I talked about the regularity process builders face, and impact those regulations have on new home prices. Now let’s discuss other expenses builder face that also impact home sale pricing.
These developers and builders typically need to apply for zoning approval. This process can frequently require attending multiple meetings with town officials. These meeting rarely happen with only a day or three between meetings. Once per month is the norm. The developers must meet environmental and energy efficiency standards. They need to pay water and sewer hook up fees. And while all of this is going on they need to pay the taxes on the property that they have purchased. And the interest on their financing needs to be paid also.
More and more ,towns are increasing minimum lot sizes and are setting aside land that will not be able to be developed. Towns are also assessing fees on the builders to pay for road improvements to handle the increased traffic that more homes will bring. Federal and state rules make the builder protect waterways and wetlands. And if an endangered species is found to inhabit the land, the project can be stopped dead in it’s tracks for years.
It’s not uncommon for the entire process to take close to a year before a builder can even begin to clear land to build homes. But the taxes, financing and legal fees keep mounting. And these expenses must be built into the selling prices of the homes that are to be built. Add these expenses to the fact that it’s getting difficult to find land for a decent sized development and you can see why the moderate priced starter home will need to continue to be a resale. home.