Housing Regulations Increases Housing Cost

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The University of Hawaii published a report listing regulations as the reason for the high cost of condominiums in the state. Hawaii's condominium median sales price is $670,000, more than double the average state.

According to the report, the high cost of housing should encourage developers to build more in the state. However, state regulations prevent developers from doing so, reducing the state's housing supply.

According to the report, Hawaii has the most restrictive housing production laws in the nation. The report mentions that the regulatory cost is the gap between the market price and the cost of producing the housing unit.

Regulations can serve an important purpose, such as preserving the environment. Factoring the cost to build the condominium, the increase in the price of a single-family condominium is the regulatory cost. Here is an excerpt from the report that sums it up best:

"The optimal level of regulation is ultimately a policy choice that must make a trade-off between the benefits of new housing and the costs of allowing more development."

In short, politicians' added policies drive up the cost of housing. Poor policy-making and decision-making are factors in Hawaii's high cost of condominiums. The University of Hawaii published a report showing a correlation between policies created by local politicians and the state's housing cost.