Why Are New Apartments So Expensive? US Professor Blames Municipal Bureaucracy

US professor Austin Zwick argues that housing prices are high not just because of expensive materials or greedy investors, but because of bureaucratic approvals and endless debates. The same pattern holds in Estonia, where municipal decision-making processes can slow down and increase the cost of building new homes.

Why does a new apartment sometimes cost a fortune before construction even begins? The question affects both the United States and Estonia, and US professor Austin Zwick offers a surprising culprit: municipal bureaucracy itself.

Bureaucracy drives prices up

According to Zwick, the main culprit is not expensive land or greedy developers, but rather the endless approvals, meetings, and negotiations that precede every new building project. Every additional requirement and every extra approval round adds time and money to the project, and this cost is ultimately passed on to the buyer. According to the professor, one of the main keys to the housing crisis lies precisely in municipal filing cabinets.

This is not just an American problem. Estonia faces a similar situation where developers must go through lengthy approval procedures before the first spade of earth is even moved. Different authorities, neighbour objections, and changes to detailed planning can drag out a project for years, and each year adds significantly to construction costs.

The Estonian context is no different

In Estonia, housing prices have risen considerably in recent years. Prices for new developments in Tallinn have become unaffordable for many families. According to experts, this stems not only from the rising cost of building materials or labour shortages; the complexity and slowness of planning processes also play an important role.

Zwick's theory therefore offers a clear message to policymakers: if housing is to be made more affordable, attention should be paid not just to the market, but also to how long and how complicated it is to obtain building permits. Simpler and faster processes could bring more apartments to the market and push prices down.