Inflation was likely the most important issue in the November presidential election. Voters seemed particularly concerned about punishing housing costs, which have rendered the American dream unattainable for many families.

The price of the average newly constructed home exploded over the last decade, from approximately $292,000 in 2012 to $644,000 in 2023. But prices vary across the country: median home prices exceed $700,000 in some states and $1,000,000 in some metropolitan areas, but sit below $200,000 in other states and metros.

The range is large, in part, because of variations in labor and land. While these may seem like fixed costs, they differ significantly across markets, partly because of state and local regulations. States’ professional licensing schemes limit the number of contractors; local zoning and federal environmental laws restrict the availability of land; and state building codes can make construction onerous.

As a memorandum just issued by the Trump administration notes, local, state, and federal regulations account for 25 percent of the cost of constructing a new home. This adds nearly $94,000 to the cost of single-family homes and is responsible for over 40 percent of expenses involved in multifamily-development construction. The impact can be felt most sharply in coastal metropolitan areas, which impose the nation’s most extensive regulatory regimes.

Home prices in Virginia, our state, have traditionally fallen somewhere in the middle of the national pack. The Old Dominion’s median home price is roughly $400,000, higher than much of the South but far lower than most of the Northeast or West Coast states. While this position might be acceptable to some, Virginia governor Glenn Youngkin is not satisfied. Over the past three years, Youngkin has made housing affordability a key part of his agenda to transform the state into one of the best places to live, work, and raise a family.

Under the governor’s Executive Order 19, which calls for reducing regulations, our offices—the Virginia Office of Regulatory Management and the Virginia Department of Housing and Community Development—have sought to lower housing construction costs. In 2021, for example, the DHCD and its associated board rejected or eliminated building-code proposals or provisions that did not enhance safety and produce value for homeowners. Those efforts cumulatively reduced the costs of building an average new home in Virginia by approximately $24,000, while maintaining building safety.

Several other Virginia agencies have also taken action to lower housing costs. The Department of Professional and Occupational Regulation, for example, has cut license-processing times by 85 percent, getting tradesmen to work much faster. It has also created new residential plumbing and HVAC licenses that can be obtained in just two (rather than four) years. The Department of Environmental Quality, meantime, reduced its permit-processing times by 70 percent and simplified its Stormwater Management Handbook. These actions have saved Virginians hundreds of millions of dollars and will likely help alleviate the state’s housing prices over time.

Lowering home prices will take a coordinated effort among federal, state, and local governments. We’re heartened that the Trump administration has made regulatory reform a federal priority, declaring on Day One that a major focus of the next four years will be reducing housing and other costs. Heading up the new Department of Government Efficiency that seeks to pare back the Leviathan in Washington, Elon Musk would do well to borrow a page from Virginia’s playbook.

Photo by: Robert Knopes/UCG/Universal Images Group via Getty Images

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