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.

About this blog…

Welcome! This forum presents an alternate perspective on the current challenges facing the city of Portland, Oregon. What effective solutions are available? What is the actual evidence that they will work, or not? How can these lessons be applied in Portland? We will pass along regular entries on timely issues from other parts of the world, comparing notes on our challenges here. We will also offer our own commentaries and those of Portland-area colleagues.

Portland is rightly regarded as an important global model of urbanism and of urban successes. Portland started with the advantage of small blocks, facilitating walkability; the Urban Growth Boundary was created in the 1970s, about the same time a freeway along the waterfront was replaced with Tom McCall Waterfront Park; Portlanders’ love of their natural setting ensured tree-lined streets and efforts to protect views of snow-capped Mt. Hood; a proposed multi-story garage in the city center became Pioneer Courthouse Square in 1984, thanks to community effort, and many other squares and parks have followed; a streetcar system and light rail were started, which gradually helped to generate suburban neighborhood centers, improving walkability; a compact mixed-use neighborhood began to replace the old industrial area of the Pearl District, initially at a good human scale; and early development of bike lanes positioned Portland as a leading US city for bicycle planning.

But we must be honest: Portland is also, and increasingly of late, a model of what can go wrong. But that too is an invaluable contribution to share with other cities, as they share their lessons with us. In that process, we may all learn from our mistakes as well as our successes, and find a path to becoming better cities. We may thereby reverse the downward spiral of so many cities today, including Portland – losing their affordability, losing their diversity, losing their architectural heritage, and becoming places of isolation, homelessness, traffic congestion and – for too many – economic stagnation, and declining quality of life.

This blog was started by Suzanne Lennard and Michael Mehaffy, both with Ph.D. degrees in architecture (at UC Berkeley and Delft University of Technology, respectively) but also with wide interests in sociology, public health, anthropology, psychology, economics, public affairs, and above all, the ingredients of livable, sustainable cities, and how we can get and keep them. This perspective is informed by seminal scholars in urban issues including Jane Jacobs, Jan Gehl, William H. Whyte, Christopher Alexander, Lewis Mumford and others, and also by cutting-edge new research. We hope you'll find it thought-provoking at least, and find some of the ideas inspiring, as we have...

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

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