Zoning. Building codes. Permitting. Taxes. Fees.

All of the above and more are imposed by federal, state and local governments whenever someone wants to build a house. These costs add a lot to the cost of a home.

You have direct costs imposed on builders, like permit fees. Then you have indirect costs: A delay in permitting means changes to the interest rates when getting a project financed. And then there are municipal rules that are tough to estimate as a cost. Prohibiting types of building in an area through zoning doesn’t by itself make building more expensive, but it still makes prices higher in the real estate market.

The most comprehensive attempt to capture the cost of government regulation to the building of a home is a report from the National Association of Home Builders. The 2026 survey says government mandates add $132,000 – or about 26% – to the purchase price.

This number has received wide media coverage while also being criticized by some organizations. The Michigan Municipal League, which is a defender of local regulations, says that this cost is not state-specific and is based on a limited, self-selected survey of builders.

Those are valid critiques. But the NAHB report is still a solid analysis, probably the best way we can feasibly measure something this complicated. The report likely underestimates the cost of government regulations.

The government regulation report is a survey of land developers and home builders that determines how much of the current average price of a new home ($499,500) comes from regulations. The survey estimates, nationally, the following costs because of the following regulations:

• Recent building codes: $40,288
• Building fees: $20,154
• Design standards: $16,117
• Government land ownership: $13,593
• Compliance costs (land fees, studies): $10,755
• Land standards (like setback requirements): $10,583
• OSHA/labor rules: $9,125
• Zoning approvals: $7,007
• Other delays: $4,112
• Total: $131,734 (or 26.4% of the total cost)

This is not the total cost of government regulation to the home. Federal policies on tariffs make materials more expensive. State occupational licensing rules limit the supply of workers. And there is no way to capture the full effect of zoning rules.

The survey does ask about costs for zoning approval (typically making sure you are in compliance or getting a variance). But when most municipalities in Michigan only allow one type of housing (a single-family home) to be built in most parts of our cities, it is very difficult to capture how much that raises the cost of housing. National studies find that strict zoning laws are associated strongly with higher housing costs, in some areas increasing the cost of housing by 40%. The loosening of zoning rules is strongly associated with lower housing costs.

This myriad of rules, regulations and restrictions – some easy to measure and many others very difficult – has caused the price of building to skyrocket over time and made it harder to live and improve. Michigan needs a mindset of entrepreneurship and growth, which is what helped build the state in the first place.

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