Everybody wants affordable housing

At a recent legislative town hall, several legislators present named affordable housing as a top priority.  There was not much specificity as to how housing should be made affordable or how to get it done.

Meanwhile, the people who actually build the houses (more precisely, the people who speak for the people who build the houses) are trying to tell us why new laws and regulations are making it less affordable to build anything.

In a letter to me, Melanie Lawton, government affairs director of the New Mexico Home Builders Association, wrote:

“The construction industry is being bombarded by new stormwater rules from NMED’s Surface Water Bureau, heat illness protection rules from state OSHA, and the State Forestry is joining with the Office of the Superintendent of Insurance on Wildland-Urban Interface (WUI) rules that will mean changes to the statewide building codes (adopted by rule).”

Most members of the Home Builders are small contractors, not big companies. Lawton was commenting about the failure of the Small Business Regulatory Advisory Commission (see my recent column) wondering why there is no forum to present the case of small business in responding to these rules.

Perhaps the OSHA issue is simplest to explain. If the proposed rule is adopted, when it’s too hot outside, construction crews will be required to stop working for 40 minutes out of every hour. They will work for 20 minutes and cool off in the shade for 40 minutes.

In the context of trying to build a house, Lawton explained, one option is that the contractor would have three crews who alternate – one working and two sitting in the shade, all getting paid. Another option is to build with just one crew so that the house takes three times as long to build. The cost increases are obvious.

The Wildland-Urban Interface issue is considerably more complicated. It relates to fire prevention and insurance, and the issue affects existing homes as well as new buildings.

As explained by Lawton and Home Builders CEO Miles Hancock, this affects whether the property can be insured, and if so, whether the insurance will be affordable. As they described it, this issue is evolving and not limited to one regulatory agency.

One concern is establishing geographic boundaries the high-risk category. According to Hancock, insurance companies are not waiting for the state to draw maps. They are setting their own guidelines and have already begun to notify property owners that the insurer will not renew a policy.

Another concern is what the property owner might need to do to make the property insurable. For existing homes, it might be necessary to replace the roof, removing old layers that do not meet the new fire-resistant standard, plus other changes including getting rid of wooden fences too close to the house and changing the landscaping. For new homes, it’s making sure the construction complies with the newest standards and using new fire-resistant materials.

Insurance companies want home builders to do more to ensure that the houses they insure won’t burn down. That’s a worthy goal, but it makes houses more expensive to build.

The housing shortage in New Mexico has recently been estimated to be as high as 90,000 units. The minimum cost to build a new house is estimated at $300,000, more than many New Mexico families can afford. While the state offers some forms of financial help to homebuyers, maybe we need to add another approach to controlling costs. Maybe we need to do more to make sure the people who make the rules are listening to the people who do the work.