NAHB Chief Economist says causes of housing affordability problems are “complex”

Another blow to simplistic “build baby build” (and undemocratic “jam it down their throats”) approaches

Residential construction in South Waterfront. Image: M.O. Stevens, Wikimedia Commons.

Writing in the national real estate trade journal Housing Wire, the Chief Economist for the National Association of Homebuilders, Robert Dietz, says that the causes of housing affordability problems include high building materials costs, new tariffs, a persistent labor shortage, building codes, and lack of financing for both buyers and, especially, developers.  Zoning codes were mentioned as only one of a number of regulatory issues, and “NIMBYism” was not mentioned at all.

From the article:

The housing market has a growing affordability problem, and here’s why.

Since 2012, housing affordability conditions for prospective homeowners have declined…. The causes of this situation are complex.

On the new construction side, a persistent labor shortage, building material price volatility and tariffs, and growing regulatory burdens on issues like zoning and building codes have held back housing production in areas with growing population and employment.

Financing issues also are holding back the housing market.

While we typically think of mortgage access issues for buyers as the financing issue of focus within the housing sector, a lack of available financing for acquisition, development and construction (AD&C) debt also is an important factor restraining construction and increasing costs….

Housing stakeholders and policymakers should take notice. Tighter availability of AD&C financing will mean future declines for housing affordability…

Other factors not mentioned in the article are the growing influence of global capital in speculative real estate ownership, and the dynamic complexity of real estate markets.  Nonetheless, Dietz does acknowledge — unlike some who promote simplistic and destructive solutions — that “the causes of this situation are complex.”

Perhaps the solutions need to reflect that complexity — not a “silver bullet” but something more like “silver buckshot?” That is, a combination of tools and strategies, based on evidence?

One can only hope that, coming out of the strange current mania for deregulatory upzoning, cooler heads will soon prevail…

Read the full article here.

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