Building a new home in our mountain resort communities, spanning Crestline to Lake Arrowhead to Running Springs, has become an increasingly cost-prohibitive endeavor. With an average home sales price of $557,000, our area is already battling housing affordability challenges.
When you consider that regulations account for 23.8 percent of the cost of building a new single-family home nationwide, according to the National Association of Home Builders (NAHB), it’s no wonder new home construction in our local market is lagging. This cost burden compounds existing challenges, such as limited land availability and high material and labor expenses, effectively pricing new construction out of reach for many.
In our region, the unique geography and environmental constraints add another layer of complexity. Nestled within the boundaries of the San Bernardino National Forest, our communities are not conducive to large-scale tract housing. Instead, developers and individual builders are limited to smaller parcels, often requiring extensive site preparation, grading and permitting to meet local building codes and environmental regulations. These regulations are essential for preserving the natural beauty of our area but come with significant costs. The NAHB highlights that nearly 15 percent of the cost of a new home stems from the development phase, including permitting fees, environmental reviews and impact studies, while the remaining 9 percent occurs during active construction due to compliance with building codes and labor laws.
In addition to regulatory costs, material and labor shortages have driven up expenses, particularly in a post-pandemic economy. Lumber prices remain volatile, and skilled laborers command premium wages, especially in a specialized mountain market.
According to Robert Dietz, chief economist for the NAHB, “Regulations and rising construction costs are a one-two punch for affordability.” These factors make building a new home in our region financially untenable for developers and prospective homeowners alike.
The lack of new construction directly impacts housing affordability and availability in our mountain communities. Existing homes often come with their own set of challenges, including outdated infrastructure, deferred maintenance and limited energy efficiency. Homebuyers seeking move-in-ready properties frequently find themselves competing in a limited inventory market, driving up prices further. Meanwhile, affordable housing options are virtually nonexistent, leaving many first-time buyers and working families unable to enter the market.
Efforts to promote affordable housing face an uphill battle. Regulatory reforms that streamline the permitting process could reduce costs, but balancing affordability with environmental stewardship remains a delicate act. Local leaders might consider incentivizing builders to focus on affordable and sustainable housing solutions, such as modular homes or accessory dwelling units (ADUs). However, these options are still subject to the same regulatory hurdles and high costs.
As we grapple with this affordability crisis, the absence of new, cost-effective housing perpetuates a cycle of limited inventory and rising prices. For our mountain resort communities, the challenge lies in finding innovative ways to create housing that respects our natural surroundings while addressing the critical need for affordability. Until significant changes are made, the dream of building a new home in Crestline, Lake Arrowhead or Running Springs may remain out of reach for most buyers, exacerbating the housing crunch in our area.
If you’d like to learn more about the current local market conditions, reach out to Theresa Grant, Real Estate Broker (DRE #01202881), at Theresa@HomesInLakeArrowhead.com. You can also follow on social – Instagram: @theresagrantrealtor|YouTube: @theresagrantrealtor. Theresa is a Broker Associate with Coldwell Banker Sky Ridge Realty.
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