Hamilton Herald Masthead


Front Page - Friday, November 27, 2015

The cost of unintended consequences

Terry Greene

A recent study by the National Association of Home Builders (NAHB) revealed some interesting and alarming data. According to NAHB research, the median price of a newly constructed home in the Greater Chattanooga area in 2014 – which includes 210,567 households – was $182,679. The annual income needed to qualify for a loan on this new home was $46,376.

Here’s the eye-opener that touches anyone and everyone interested in purchasing a new home in the Greater Chattanooga area. For every $1,000 increase above and beyond the median price, 510 households fall off the qualified loan list. Keep that number in mind.

The cost of local, state, and federal regulations on the residential construction industry – such as the increased costs related to the local storm water management ordinance – continues to mount. And as building costs mount, so does the cost of a new home. For example, the cost of meeting Chattanooga’s storm water management regulations could cost the developer over $15,000 per single family lot.

Using the NAHB study as a baseline, simple math tells us that by increasing the cost of a home by $15,000 could mean that more than 7,500 households will have been disqualified for a loan on a median priced home in Chattanooga or the surrounding area. Faced with this reality, potential home buyers will either purchase a less expensive home, or more likely, choose not to purchase another home at all. When this happens, the new construction industry that is just now beginning to dig itself out of a five year hole will once again slow to a crawl.

That is a scenario that not only impacts the new home buyer, it’s also a road map to economic disaster for the suppliers and subcontractors that greatly depend on residential construction to keep their doors open and feed their families. In short, when any local government exceeds state regulatory requirements, it cuts deep into the economic fiber of Chattanooga’s local economy.

Limiting storm water runoff and protecting our natural environment is a worthy goal that everyone shares. With that goal in mind, the Home Builders Association of Greater Chattanooga (HBAGC) – and the hundreds of businesses and thousands of families it represents – is committed to reaching a common sense solution in a responsible and honest manner.

As well intended as some of the local, state and federal government’s rules and regulations might be, the true cost of unintended consequences can be devastating to our local economy. HBAGC will continue to work with city and county officials in an effort to reach a balanced consensus on the storm water management issue, and others, that protects our environment, meets State of Tennessee mandates, and limits escalating costs on the consumer.

To do anything less could eliminate thousands of potential new home owners from the real estate market and, in the process, harm local employers that serve the building industry. And it could also eliminate the opportunity for many of our citizens to realize the American Dream of home ownership. No one wants to see that happen.

Terry Greene is the executive officer of the Home Builders Association of Greater Chattanooga (HBAGC). In that role, he’s responsible for the day-to-day management and operation of HBAGC and its 400–plus members.