In land-rich countries like Canada, the primary cause of soaring housing costs is not a lack of land, labor, or materials. Instead, government-imposed costs—including taxes, development fees, and slow, bureaucratic permitting processes—make up the vast majority of the price of a new home.

Building products like insulation and roofing are often manufactured domestically because safety and building codes vary significantly country-to-country. This makes it more practical to produce goods closer to the end market where they will be used, rather than exporting a standardized global product.

Overly complex building regulations result in regulatory capture. Only large, well-connected developers can navigate the system, creating a moat that stifles competition from smaller innovators and keeps prices artificially high for consumers.

Despite a shortage of 10 million homes in Europe, construction has stalled. Holcim's CEO identifies slow and complex permitting processes as the primary bottleneck holding back development, more so than interest rates, labor shortages, or affordability.

Beyond zoning debates, the complexity and outdated requirements of building codes massively inflate construction costs. Drew Warshaw proposes a novel approach: auditing the building code itself to create a streamlined, model version that could strip 15% from project costs, making it a powerful tool for affordability.

Housing scarcity is a bottom-up cycle where homeowners' financial incentive is to protect their property value (NIMBYism). They then vote for politicians who enact restrictive building policies, turning personal financial interests into systemic regulatory bottlenecks.

A significant, overlooked driver of housing unaffordability is that the construction industry has become less efficient over time. Fed President Austan Goolsbee notes that construction productivity has actually been negative for the last 40 years. Unlike other sectors that innovate, we are getting worse at building, which directly contributes to higher costs.

The housing crisis is primarily a supply problem manufactured by regulation. National studies show that permits, fees, and zoning delays account for 25% of a single-family home's price and over 40% of an apartment's cost. Deregulation is the most direct path to solving the affordability crisis.

Contrary to most industries that see technological gains, housing construction has become less efficient. This stagnation is a key, often overlooked driver of housing affordability issues, as the fundamental cost to build has not decreased with technology.