[surfaceofthesun]

You can't discount Baumol's cost disease. While it's true that government regulation is some part of it, like real declines in home building productivity in the previous decade or two, that certainly is not the root of the problem. Beyond limits to theoretical growth in productivity for these areas, there absolutely are perverse incentives in all of those industries.

For example, 40% of corn in the US goes towards <10% of of gas via ethanol. Even without subsidies, refiners would likely use some ethanol because it's a cheap octane booster. Insurers weren't regulating healthcare prices before the ACA and now face a profit limit tied to payouts -- which creates another perverse incentive. Doctors are incentivized to specialize instead of entering family medicine. They're also incentivized to run more tests defensively because they charge more and it reduces liability for malpractice.

Even in areas that are more builder-friendly, there is still incentive to build denser housing (which is more efficient) that maximizes return per sq ft. So you get studios, 1 bedroom, and 2 bedroom homes. And larger homes (built outside of onerous zoning areas) that more amenable to raising families end up creating unsustainable costs for local municipalities through sprawl.

Some of these areas can be addressed by a free market but maintaining a healthy market that minimizes perverse incentives requires significant tweaking (i.e. regulations)

[conductr]

I don't think building homes is really prohibitive due to regulations. I know it varies a lot by region of course. But I'm in an area that isn't really effected by earthquakes and has no frost line/need for basement/etc. I've built a few houses as a GC. It's land more than anything that's gone up in the past ~15 years since I first started in it. That's purely a market force. Second is skilled labor, even unskilled labor honestly. There's just a massive shortage of people doing manual labor/sweaty work, and I typically have access to a major pool of immigrants as we border Mexico. In terms of materials, there's some regulated things we have to do more of now, like insulation and other energy efficiency things but it's rather small in the scope of things. I currently own a 1950s built mid-century modern that was built in a time of low regs here. If I were to build it exactly as it is (to past codes) and simultaneously build it again (to current codes), the current code version would only be about 10% more. Likewise, if I demolished it and just sold the land, I'd still get about 90-100% of what it's market rate is right now. That market rate has ~quadrupled in the 15 years I've owned that house and to reiterate, the home itself is nearly worthless. I'm not in a fastly gentrifying area either. I'd say it's affluent but it always has been since I owned it, it's become more common to just knock down the original homes and build new.