What the 21st Century ROAD to Housing Act Could Mean for Self-Directed Investors   

By James P. Schlimmer

Housing affordability remains one of the country’s most pressing economic challenges, and lawmakers continue searching for ways to encourage additional housing supply.

One proposal drawing significant attention is the 21st Century ROAD to Housing Act. It’s proposed federal legislation intended to encourage housing development through reforms aimed at streamlining certain federal processes, supporting manufactured housing, expanding financing opportunities, and addressing barriers to housing supply. While the bill has not become law, it has renewed discussion around housing affordability and housing production.

Whether or not the 21st Century ROAD to Housing Act ultimately becomes law, it has renewed the national conversation around housing affordability and housing supply.

For self-directed real estate investors, understanding the economic forces behind that conversation—and staying informed about local market conditions—may provide valuable perspective when researching future opportunities.

Why has it become so expensive to build a new home?

For investors using a self-directed IRA to invest in real estate, understanding the factors that influence housing supply and affordability may provide valuable context during due diligence. While no single piece of legislation determines how an individual market will perform, public policy, local regulations, financing conditions, and demographic trends all help shape today’s real estate environment.

According to the National Association of Home Builders (NAHB), regulations imposed at the federal, state, and local levels account for an estimated $131,734 of the average price of a newly built single-family home—approximately 26% of its final selling price.

Understanding where those costs originate—and which decisions are made at the federal versus local level—may help investors better understand today’s housing market as they conduct their own due diligence.

Stay Ahead of Your Local Market

Housing policy may begin in Washington, but real estate investing happens locally.

The Real Estate Accelerator from Equity Trust Company brings together educational resources, local housing market reports, foreclosure trends, single-family rental data, and other research tools designed to support investors as they conduct their own due diligence.

Why the 21st Century ROAD to Housing Act Matters

The proposed ROAD Act has renewed discussion about reducing barriers to housing development and improving housing affordability.

Supporters believe the legislation could help streamline certain federal review processes, modernize portions of housing policy, encourage additional housing production, and improve financing access for qualifying projects.

However, housing affordability is influenced by far more than a single piece of legislation.

To understand why the ROAD Act has generated so much attention, it’s helpful to first understand where the cost of building a new home actually comes from.

What Drives the Cost of Building a New Home?

When most people think about rising housing costs, they often point to mortgage rates, labor shortages, or building materials. Those factors certainly matter. But the regulatory cost stack begins long before construction crews arrive on a jobsite.

According to the National Association of Home Builders, regulations account for approximately 26% of the cost of a newly built single-family home.

Those costs may include:

• Zoning approvals and building code compliance
• Traffic and environmental studies
• Utility connection and impact fees
• Land dedication and inspection requirements
• Architectural design standards
• Development delays associated with permitting and approvals

Many of these requirements serve important purposes related to public safety, environmental stewardship, and responsible community planning. Collectively, however, they represent a significant portion of the total cost of housing.

According to NAHB’s analysis, approximately $46,795 of regulatory costs occur during lot development, while approximately $84,939 occur during construction after the finished lot has been purchased.

Perhaps the most surprising finding is the largest individual category. Building code changes implemented over the past decade account for more than $40,000 of the average new home’s cost—making building code requirements the single largest regulatory cost category identified in the study.

Housing Policy Is Also Local Policy

One of the most important lessons from the ROAD Act is recognizing where housing policy is implemented.

While Congress may influence housing through financing programs, incentives, and federal regulatory reforms, many of the decisions affecting housing supply occur much closer to home including:

• City councils.
• County commissions.
• Planning boards.
• Local building departments.

These organizations often oversee zoning decisions, subdivision approvals, density requirements, setbacks, architectural standards, permitting processes, and impact fees.

As a result, housing markets may evolve very differently from one community to another.

For self-directed real estate investors, this reinforces an important principle …

Real estate is local.

National headlines provide useful context, but local market conditions often tell the more complete story. Every market is different. One ZIP Code may be experiencing declining inventory while another sees an increase in available homes.

Rental demand may strengthen in one county while new construction accelerates in another. Foreclosure activity, days on market, price reductions, inventory levels, and rental trends often vary significantly across neighboring communities.

For investors conducting due diligence, understanding these local trends may provide valuable context alongside evaluating an individual property.

To support that research process, Equity Trust Company recently launched the Real Estate Accelerator, which brings together educational resources and local market intelligence in one location, including:

• Weekly local housing market reports
• Foreclosure activity and trends
• Single-family rental market data
• On-market and off-market property search capabilities
• Educational resources for self-directed real estate investors

Local market data may provide valuable context alongside national housing trends, helping investors conduct more informed due diligence in the markets they follow most closely.

Looking Beyond Today’s Headlines

Whether or not the ROAD Act becomes law, it has already renewed an important conversation about housing affordability.

The legislation also highlights an important reality—housing affordability reflects the interaction of many economic forces including:

• Interest rates
• Population growth
• Infrastructure investment
• Available land
• Labor availability
• Construction costs
• Financing conditions
• Local regulations
• Public policy

That’s why no single factor determines the future of a housing market. For investors, understanding how these broader economic forces interact may provide valuable perspective as they evaluate long-term real estate opportunities and conduct their own due diligence.

Planning Beyond the Purchase

Understanding housing policy and local market conditions is only one part of long-term real estate investing.

Eventually, many investors consider when and how to reposition an investment property.

For investment property held outside a retirement account, a Section 1031 exchange may allow eligible investors to defer certain capital gains taxes by exchanging one qualifying investment property for another when IRS requirements are met.

Because strict IRS timelines apply once a property is sold, planning may help investors better understand the exchange process before a transaction begins.

Equity 1031 Exchange provides educational resources and qualified intermediary services designed to help investors better understand the 1031 exchange process and its requirements as they evaluate future portfolio decisions.

Looking Ahead

Whether the 21st Century ROAD to Housing Act ultimately becomes law or not, it has already accomplished something important—it has renewed the national conversation around housing affordability and housing supply.

For self-directed real estate investors, understanding the economic forces behind that conversation, and staying informed about local market conditions, may provide valuable perspective when researching future opportunities.

To assist, the Real Estate Accelerator from Equity Trust Company provides educational resources and market insights designed to support investors as they conduct their own due diligence.

And for investors planning a future sale of investment property held outside a retirement account, Equity 1031 Exchange offers educational resources to help better understand the exchange process and its requirements.

James P. Schlimmer is SVP, Real Estate Growth Officer at Equity Trust Company.

Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust Company is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.

The role of Equity 1031 Exchange, LLC (formerly Midland 1031, LLC) as Qualified Intermediary is limited to acting as qualified intermediary within the meaning of Regulations section 1.1031(k)-1(g)(4) for Federal and state income tax purposes. In this regard, Equity 1031 Exchange is not providing other legal, investment, or due diligence services. The taxpayer/exchanger must direct all investment transactions and choose the investment(s) for the exchange. Nothing contained herein shall be construed as investment, legal, tax or financial advice or as a guarantee, endorsement, or certification of any investments, legal effect or tax consequences of the transfer, conveyance and exchange of the Relinquished Property and/or the Replacement Property.