Every time the topic of rising real estate prices comes up, people point to the same reasons: lake views, waterfront access, highway frontage, desirable neighborhoods, school districts, and simple supply and demand. Those factors certainly influence value. Property is worth what someone is willing to pay for it.
But there is another side of the story that is rarely discussed by people outside the development industry.
The cost of creating a buildable lot has become extraordinarily expensive, and much of that cost has little to do with the land itself.
Most people understand that infrastructure costs money. Roads, water systems, sewer systems, septic systems, wells, power lines, fiber optics, drainage facilities, and other utilities all require significant investment. What many people do not realize is that before a single shovel touches the ground, a developer may spend years navigating permits, studies, reviews, hearings, approvals, and legal challenges.
A typical subdivision often begins with a pre-application meeting. From there come preliminary plats, engineering reports, environmental studies, utility plans, traffic analyses, and countless supporting documents. Those applications move through completeness reviews, sufficiency reviews, staff reviews, agency reviews, and public hearings. Depending on the project, approvals can take months or even years.
Environmental and land-use requirements alone can add substantial costs. Floodplain permits, drainage studies, wetland delineations, groundwater investigations, water availability determinations, water rights reviews, and health department approvals may all be required before a project can move forward. Each study, review, and revision carries both direct costs and additional delays.
One of the biggest contributors to rising development costs is the growing number of requirements imposed by federal, state, county, city, and special-purpose districts. Developers may be required to install sidewalks, curb and gutter, street lights, stormwater facilities, parks, open space, landscaping, irrigation systems, and other public improvements. Transportation agencies may require turn lanes, intersection improvements, road widening, or upgrades to roads outside the subdivision itself.
Public safety requirements can add even more expense. Fire departments may require secondary emergency access roads, wider roadways, additional water storage, fire hydrants, bridge improvements, or wildfire mitigation measures. Trees may need to be removed to create defensible space and improve emergency access.
None of these individual requirements are necessarily unreasonable. Safe roads, reliable water systems, environmental protection, wildfire mitigation, and emergency access are legitimate public concerns. The challenge is that every requirement adds cost, time, engineering, and risk to the development process.
Even after satisfying these requirements, a project can still face appeals, objections, or lawsuits that delay progress for months or years. Meanwhile, financing costs continue to accumulate. Most developments rely on borrowed money, and interest payments do not stop simply because approvals are delayed.
After years of planning, engineering, permitting, review, and construction, a final plat may finally be approved. Only then can the lots legally be created and sold.
Yet the process does not end there. Utilities must be installed, roads completed, and final inspections performed. Buyers may still need to drill wells, obtain septic permits, secure building permits, and complete site-specific improvements before construction of a home can begin.
By the time a family purchases a lot and builds a house, years of work and substantial costs have accumulated long before construction ever starts.
When people complain about the price of lots and housing, many assume developers are simply charging more because they can. Certainly, market forces play a role. But a significant portion of today’s housing costs comes from a process that has become increasingly lengthy, complex, expensive, and uncertain.
Years ago, planning and permitting costs might have added only a few thousand dollars to a lot. Today, in many subdivisions, especially those requiring public infrastructure, the combined cost of planning, permitting, engineering, compliance, infrastructure, financing, and risk can exceed $100,000 per lot before considering the original cost of the land itself.
The problem is cumulative.
Every permit, every study, every review, every hearing, every infrastructure requirement, every impact fee, every delay, every appeal, every lawsuit, and every financing cost ultimately becomes part of the final sales price.
When the public sees a finished subdivision, they see a lot selling for a high price. What they do not see are the thousands of hours of planning, engineering, permitting, compliance, construction, financing, and risk that occurred before that lot ever reached the market.
If we genuinely want more affordable housing, we cannot focus solely on land prices and construction costs. We must also have an honest conversation about the growing cost, complexity, uncertainty, and time required to turn raw land into a buildable lot.
Until we do, housing will continue becoming more expensive, and the people who ultimately pay the price will be the families trying to achieve the dream of homeownership.
Marc Liechti lives in Lakeside.