When it comes to the rising cost of housing in Georgia, there is a hidden driver in the lack of affordability that has nothing to do with workforce or building materials: the cost of time.
While Georgia continues growing rapidly – adding over a million residents each decade dating back to 1980 – bureaucratic review has become a costly bottleneck for building homes. For homebuilders and future homeowners, unnecessarily dragging out the permitting process is more than an annoyance; it adds directly to the price of housing.
Each time a local government sends required changes back to the builder, the “shot clock” for approving the permit – and starting the building process – resets. Delays like this are sometimes even due to city and county departments requiring changes that are in conflict with one another’s directive.
Why do these delays cost money? For starters, any required alterations to building or land development plans often equate to costly revisions performed by architects and engineers. The more complicated the changes required, the more expensive it is for these licensed professionals to craft solutions. Even “minor” changes cost both time and money when it comes to utilizing these services.
When local governments delay permit approvals, builders and developers also face increased carrying costs. Construction loans start to accrue interest once the initial drawdown has been made – this type of financing is typical both in lot development and homebuilding. Delays increase the interest accrued and are reflected in the final amount due when the loan is repaid. Ultimately, these costs aren’t absorbed by construction companies; they are passed directly onto the buyer.
Research reveals the reality of these inefficiencies: The average overall cost of delay for a single-family home in Georgia is 0.8% of the total value.
This is no rounding error. On a typical $350,000 home, it would equate to roughly $2,800 added to the purchase price – solely due to time lost to delays during permitting and typically split evenly between permitting for land development and building the home.
It is also important to clarify that these permitting delays occur after any contentious zoning decisions and do not account for the time spent debating where housing should go or what it should look like.
These costs accumulate after a community has provided feedback and policymakers have given the green light, simply because the approval is held up unnecessarily. All to say, that average increase of 0.8% comes on top of otherwise typical, but still costly, time delays that builders and developers already figure into the cost of building a new home.
With 94 of Georgia’s 159 counties facing some type of housing shortages, one immediate solution to reduce costs lies in better government efficiency. To make building homes cheaper, the state should ensure permits are processed in a timely manner.