You Ask: “Why is Building a Home in California so Expensive?”
We Answer: “Housing Permits Play a Big Role”
Can’t wait to customize your personal haven in the Golden State? Need insights on why building a home in California is so expensive? Between the availability of land, labor and resources, to weather conditions, permits and taxes, several local factors will influence your construction costs.
As Silicon Valley’s premier construction experts, we closely monitor the housing market, and understand the industry’s dynamics inside and out. In our 3-part series on factors that magnify construction costs in California, we shared our insights on (1) rising costs of labor and (2) escalating material costs.
In this concluding page, our experts shed light on how housing permits can make building a home in California so expensive.
Part 3: Housing Permits May Hinder Your California Custom Home Build
As one of the top 3 most expensive states in which to build a custom home, California’s average construction cost of $439k is 40% higher than other, less expensive states. Building costs in our sprawling state vary by city and location, with certain pockets being far more expensive than others.
Moreover, land development fees and building permits are costly, and the process of getting approvals is extremely tedious and time-consuming. This is particularly true in a highly regulated state, such as California, where there are multiple conditional reviews to determine allotment of permits.
- Many review committees: In addition to two distinct entities, the zoning commission and the environmental review board, you need permits and approvals from several other government agencies. These include the building department, fire department, health department, city council and more.
- Density control regulations: For the purpose of density control, in some communities there are stringent lot size restrictions, such as the ownership of a minimum one or one-half acre plot. The bigger the minimum lot size, the higher the upfront costs of land acquisition.
- Environmental regulations: The California Environment Quality Act (CEQA) has several strict conditions that consider the environmental impact of new home construction. However, many approvers misquote or misuse this law, causing a 2-2.5 year delay in housing permits for even those projects that comply with environment protection regulations. Additionally, starting in 2020, all newly built homes in the state must be solar-powered. According to the Energy Commission, this will lead to an upfront cost of $8,400 for installing solar panels for a single family home.
- Political and community involvement: The higher the state regulations, the more intense the community and political involvement in land use and control processes. For residents who fear that new construction will change the character of their neighborhoods or hurt their property values, there are plenty of avenues to express opposition. This can lead to expensive delays in permits, inspections and approvals.
There is no specific research study showing exactly how much delayed building permits adds to housing costs. However, the typical approval time for new projects in the Bay Area is 12 months, whereas, in Los Angeles, it is 8 months. This excludes the time it takes to rezone land for residential use.
Hire a Dependable Contractor to Build Your California Dream Home
At Flegel’s Construction Co., we specialize in building attractive, functional, high-quality custom homes. Our new home construction team includes experts who can navigate the permits and approvals process to minimize your wait times and building costs. You can count on us for superior craftsmanship, honest communication and timely completion of projects.
We continue to build and deliver stylish, comfortable dream homes to happy customers in and around the Bay Area.
Building a home in California is expensive, but isn’t your dream home worth it? Contact us online to discuss your project.