Kansas City needs more housing. Tighter energy building rules make it more expensive | Opinion
The Biden administration recently issued new energy regulations for homes built using federal money. Proponents claim the new rules, which update the standards for items such as insulation, heating and cooling systems, windows and the like, will reduce energy usage and therefore reduce costs. But Kansas City’s experience with the new energy codes suggests the consequences might be dire..
Increasing housing regulations increases housing costs — no one disagrees with this. The Department of Housing and Urban Development claims the new regulations will add an average of $7,200 to each single-family home. However, NAHB, the National Association of Home Builders, recently issued a statement claiming the new rules will add $31,000 to the cost of a home, requiring 90 years for a homebuyer to see any net savings.
How can we weigh these competing claims?
The new federal regulations require builders to meet the 2021 International Energy Conservation Code. The IECC updates its codes about every three years. Prior to the administration’s action, federal agencies had been using the 2015 IECC standards. Incidentally, in 2024 the IECC issued its latest guidelines, in which it claims to have relaxed some of its standards.
Kansas City already has been down this path. In 2022, the City Council adopted the 2021 IECC standards, so that as of Sept 29, 2023, “All plan and permit submissions will be required to be in full compliance with the 2021 IECC.”
The higher costs put buying a new home out of reach for many more people. According to a March 2024 study released by NAHB, each $1,000 added to the cost of a new home prices out 747 Kansas City households. Even with HUD’s modest cost impact, that’s more than 5,300 of our potential neighbors unable to buy a new home.
Builders understand the market: If they think they can’t earn a return, they won’t build. That is exactly what happened. For at least three months after the new standards were in place, Kansas City issued zero permits under the new code. Yet in neighboring municipalities, new housing construction continued as usual.
In an interview on Fox4, Will Ruder of the Home Builders Association of Greater Kansas City said the city’s adoption of the 2021 IECC resulted in “a historic reduction in new housing starts in Kansas City, Missouri.” Before the new standards, Kansas City proper accounted for a quarter of new housing construction in the metropolitan area, he said. Since the new standards took effect, Kansas City made up less than 4%.
Why did Kansas City kill its housing construction market? The U.S. Department of Energy offered cities hundreds of millions of dollars to adopt the new standards without any amendments. Because Missouri and Kansas are two of only six states that do not have statewide building codes, the standards are set at the municipal level.
Taking the bait, the council introduced legislation in April 2022 to adopt the 2021 IECC standards. The measure was passed in October 2022, taking effect a year later. New housing permits stopped. Adding insult to injury, Kansas City never received any of those promised federal funds.
The good news is the City Council may have learned a lesson. A new ordinance will allow builders to receive permits without having to meet the prohibitively expensive standards of the 2021 IECC. Instead, the proposed approach allows builders to move forward with construction if they demonstrate they not only meet the 2018 residential code for the structure but also show upgrades in their energy efficiency — bringing them up to the standards in Overland Park and Prairie Village. This satisfies the desire to reduce energy consumption without making costs prohibitive.
Policymakers should heed economist Thomas Sowell’s admonition: “There are no solutions. There are only trade-offs.” If your solution is more housing regulation, be prepared for increased housing costs or no housing construction at all. Neither option makes Kansas City an affordable place to live.
Patrick Tuohey is co-founder of Better Cities Project, a 501(c)(3) nonprofit focused on municipal policy solutions, and a senior fellow at the Show-Me Institute, a 501(c)(3) nonprofit dedicated to Missouri state policy work.
