Volume 4 Number 2
February 2007
In this Issue
What’s Happening to Assisted Multifamily Housing Properties?
Weighing Costs and Benefits of Major Housing Regulations
Innovation in Residential Construction
Effective CDBG Subrecipient Management
In the next issue of ResearchWorks
Weighing Costs and Benefits of Major Housing Regulations
Of the homes destroyed by Hurricane Andrew in 1992, 36 percent were manufactured housing, which accounts for just 5 percent of the total housing stock in the affected counties. In the aftermath of the storm, an astounding $278 million in disaster relief was attributable to manufactured housing.
These losses prompted HUD to revise regulations that set wind standards for manufactured housing. The agency’s goal was to respect the integrity of manufactured
housing as a low-cost housing option while improving its wind resistance. The new standards would reduce injury and death, property damage to (and caused by) manufactured homes, and insurance costs. All manufacturers would be required to design and assemble according to the more stringent wind standards, and certify to consumers that their housing meets these standards.
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The destruction caused by Hurricane Andrew prompted HUD to revise wind standards for manufactured housing.
Picture: Courtesy of National Oceanic and Atmospheric Administration/Department of Commerce. |
The proposed revisions required the use of structures and fasteners similar to those which were effective in site-built construction, including better shutters for doors and windows, stronger foundations, and heavier materials for fastening roofs to walls and walls to floors. The overall objective was to raise wind standards just enough to reduce costs associated with storm damage, without decreasing purchases or making manufactured homes less affordable.
This effort is just one example of a new analytic
procedure, the Housing Impact Analysis (HIA), that studies the effects that a proposed regulation might have on housing costs, supply, and affordability. Currently, federal rules of major economic importance undergo a Regulatory Impact Analysis (RIA), which calculates the costs, benefits, and other effects of
federal regulations. A standard RIA, however, may not provide policy-relevant measures of the effects of a regulation on participants in the housing market. To remedy this, HUD developed the HIA to supplement the RIA. A recent report, Housing Impact Analysis, provides
guidance on when and how to perform an HIA.
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HUD's Housing Impact Analysis determined that the benefits outweighed the costs of revising wind regulations for manufactured housing.
Picture: Courtesy of National Oceanic and Atmospheric Administration/Department of Commerce. |
HUD applied the HIA to the new regulations developed to improve the safety of manufactured houses in the two wind zones that sustained the greatest damage from Hurricane Andrew. The report explains how researchers estimated the total costs of more stringent wind standards for consumers and producers, as well as the cost to the economy if the new standards caused the market for manufactured homes to decrease. The desired benefit was a 75 percent reduction in wind damage suffered in one wind zone and an 83 percent reduction in another. The total costs, $51.7 million, were weighed against a total of $83.8 million in private and public savings, as well as reduced death and injury costs. The benefits outweighed the costs by $32.1 million, an amount that seemed to justify the regulatory revisions.
Housing Impact Analysis includes guidelines and step-by-step instructions for using the HIA. Its appendix provides information on where to locate useful data and which regulations might affect new or existing homes, multifamily units, particular home designs, and particular locations. It also refers the reader to data on housing supply, housing demand, house prices, interest rates, housing finance, regulation measures, and general surveys and data sets.
Housing Impact Analysis is available free at www.huduser.org/publications/affhsg/hsgimpanal.html. Print copies are available for a nominal fee from HUD USER by calling 800.245.2691 and selecting option 1.
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