Although nongovernmental constraints are primarily market-driven and generally outside direct government control, localities can significantly influence and offset the negative impact of nongovernmental constraints through responsive programs and policies. Analyzing specific housing cost components — including the cost of land, construction costs, and the availability of financing — assists the locality in developing and implementing housing and land-use programs that respond to existing local or regional conditions. While the cost of new housing is influenced by factors beyond a locality’s control, local governments can create essential preconditions (favorable zoning and development standards, fast-track permit processing, etc.) that encourage and facilitate development of a variety of housing types and levels of affordability.
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Government Code Section 65583(a)(6) requires “An analysis of potential and actual nongovernmental constraints upon the maintenance, improvement, or development of housing for all income levels, including the availability of financing, the price of land, and the cost of construction.”
Requisite Analysis
- Land costs — Estimate the average cost or the range of costs per acre for single-family and multifamily-zoned developable parcels.
- Construction costs — Generally estimate typical total construction costs, including materials and labor.
- Availability of financing — Consider whether housing financing, including private financing and government assistance programs, is generally available in the community. This analysis could indicate whether mortgage deficient areas or underserved groups exist in the community. The financing analysis may also identify the availability of financing from private foundations (including bank foundations) corporate sponsors, community foundations, community banks, insurance companies, pension funds, and / or local housing trust funds.
Potential Contacts and Data Sources to Assist in Analysis
- Local developers and title companies
- Local banks (Home Mortgage Disclosure Act data)
- Building department (valuation data)
- For-profit and nonprofit building industry
Helpful Hints
Jurisdictions that prepare Analysis of Impediments to Fair Housing for the Consolidated Plan may be able to use policy information from the plan to assist with the analysis of available financing. Learn more about Consolidated Plans.