Local builders told Lt. Gov. Micah Beckwith in Bloomington Thursday that too many costly regulations in Indiana inhibit the construction of homes in the state and inflate the housing affordability crisis.
The state’s builders have added 3% more single-family homes in the first six months of this year than last year, said Rick Wajda, CEO of the Indiana Builders Association. However, builders are adding only about 19,000 single-family homes per year, compared to about 30,000 per year before the subprime mortgage crisis about 20 years ago — even though demand for homes has remained steady.
Demand continues to outstrip supply, he said.
That’s in part because the subprime mortgage crisis led to many builders leaving the business: Wajda said the association had more than 7,000 members 20 years ago. It has about 2,600 today. That includes builders but also subcontractors such as plumbers and electricians who went out of business and have not been replaced.
“We’ve been underbuilding for over a decade,” Wajda told about 100 attendees Thursday at the Bloomington Convention Center at a meeting organized by the Building Association of South Central Indiana.
The median new home price in Indiana this year is at about $484,000, he said, and the income required to qualify for that house is about $148,000 a year, which means about 83% of Hoosier households cannot afford that home. For every $1,000 increase in the price of a home, 2,300 Indiana households are priced out of the market, he said.
Demand for more expensive homes has remained strong because wealthier buyers see much less of an impact from high interest rates, Wajda said.
A 7% interest rate, compared to a 3.5% interest rate, adds hundreds of dollars to the monthly mortgage payment, even for a home priced much lower than $500,000.
“That young family just starting out, that mortgage rate, that increase in regulatory costs, they're very susceptible to that, right? They're pushing up against the edge to be able to afford that first time house that they want,” Wajda said.
Wajda said houses have become unaffordable for large sections of the population in part because of higher materials and labor costs, but also because of regulatory hurdles. He said 24% of the cost of a new home is the result of regulations at the local, state and federal levels. For a $500,000 home, regulations add about $120,000 to the price.
Beckwith was surprised by the 24% figure.
"That's insane. I'm gonna tell you that right now," he said. "... I'm not saying take away the boundaries altogether. Government does play a regulatory role. (But) 24% to me, just seems egregious."
Beckwith urged local builders to talk to him or Gov. Mike Braun about potential legislative fixes.
"Let our teams know, and we'll go to bat with the legislature and kind of say, 'Hey guys, we need to think about... deregulating some of this," he said.
Wajda said that at the local level, for example, the amount of money and time it takes to get local projects to a building stage is unnecessarily adding costs to construction.
Some communities require houses to be a certain size and/or to have three-car side-load garages, which means builders need to have a larger lot, he said, and Indiana has among the largest lot sizes in the country.
“We can build more houses on smaller lots with less infrastructure cost. That gives us the opportunity to drive that cost down,” Wajda said. “In a lot of communities, we can't do it because they have minimum square footage requirements, minimum lot size requirements, architectural standards. Houses have to look a certain way, and that prevents us from being able to bring in a product at a lower price.”
He praised the approach by the administration of Bloomington Mayor Kerry Thomson to cut through some of that red tape by, for example, offering builders pre-approved housing plans for developments in the Hopewell neighborhood.
Wajda said when builders know from the start what types of products they can build in a neighborhood, it reduces uncertainty and costs, not unlike the approach larger builders take by offering certain floor plans in neighborhoods they’re building.
Housing affordability crisis — or low wage crisis?
Some economists and local officials also have said the housing affordability crisis is, at least in part, a stagnating wages crisis. Data from the Federal Reserve Bank in St. Louis show average weekly wages for employees in private establishments in Bloomington have fallen in the last 30 years, when adjusted for inflation.
Beckwith said the policies being pursued by U.S. President Donald Trump should help address some of those challenges.
For one, he said, the president’s implementation of tariffs should help return some high-wage manufacturing jobs from overseas.
Proponents of tariffs argue that they make imports more expensive, which should shift consumer demand to comparatively less expensive products made domestically and/or prompt manufacturers to bring back operations to the U.S. to avoid the tariffs. However, some critics of the approach have argued that tariffs simply raise prices for consumers, disregard complex supply chain dynamics and are unlikely to sway employers to move expensive manufacturing operations to the U.S., especially in light of America’s fickle political environment.
Beckwith also said the president’s approach to clamp down on illegal immigration should help boost wages.
People who enter the U.S. illegally or overstay their visas “are undermining the competitive market for high-paying jobs, … (and) businesses all over the state and the country are taking advantage of that,” he said.
However, academic researchers generally agree that large reductions in the number of illegal immigrants likely will do little — if anything — to boost wages among native populations. For example, a July 2025 analysis by the Penn Wharton School at the University of Pennsylvania suggests that mass deportation “reduces wages of high-skill workers, compromising 63% of workers. Still, authorized low-skilled workers can see their wages increase, but only if the deportation policy is permanently sustained after four years.”
Nonetheless, Beckwith said if the state and country start addressing some of the breakdowns in the domestic marketplace, a lower supply of labor will require employers to pay more to attract and retain workers.
“It's not a state legislative fix, just saying, ‘Well, we're going to increase the minimum wage to $20 an hour.’ All that's going to do is ... increase inflation,” he said.
Build out — or build up?
Some Bloomington and Monroe County officials in the past few years also have clashed repeatedly on how and where the community should add more housing. Some city officials have urged county colleagues to allow more or denser housing developments on the city’s fringes, but county officials have said they want to preserve the county’s rural character and that the city, instead, should allow for higher residential buildings.
Beckwith warned communities against pursuing density for the sake of density, and urged them instead to let their cities and towns grow organically.
“I've seen it in Hamilton County, where we're just shoving just anything we can … in this plot of land, and we're losing the heritage and the history of what made these towns awesome,” he said.
“I’m not saying we’re against growth, but I’m saying, let’s be careful. Let’s not … get over our skis,” Beckwith said. “... let’s be wise on how we grow.”
Boris Ladwig can be reached at [email protected].
This article originally appeared on The Herald-Times: Lt. Gov. Beckwith: Trump tariffs, immigration crackdown will boost wages
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