What Does the Next Administration Need to Do to Tackle Housing Affordability?

Housing Affordability
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Contact: Whitney Richardson
(202) 266-8404
wrichardson@nahb.org

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As the country continues to rebound from the impact of the COVID-19 pandemic, housing has been a bright spot in the economic recovery. Housing affordability will continue to be a top priority amid rising prices due in part to low inventory and supply-chain issues. NAHB recently shared with The Hill key issues that the next administration will need to tackle to help keep housing affordable and accessible to everyone.

“First and foremost, [we need a] COVID relief package,” said Jim Tobin, NAHB’s chief lobbyist. “We have got to make sure that we keep the economy going between now and when we fully see a recovery.”

A robust package that includes rolling out the COVID-19 vaccine, supporting small businesses, providing rental assistance and unemployment insurance, and helping state and local governments hit hard by the pandemic will be critical to helping move the economy forward

“We’re going to see the fees that go into home construction — especially new home construction — are going to rise because we’re the one bright spot in the economy,” Tobin shared. “And that’s a direct correlation to seeing home prices go up at a time where we don’t need that.”

Almost a quarter of the cost of single-family homes and nearly a third of the cost of multifamily construction are attributed to local, state and federal regulatory costs.

“We need all levels of government to be mindful of the impact of regulations on housing costs,” he added.

Another area of importance is labor policy and workforce development efforts to help address the labor shortage in the housing industry.

“For a number of years, the residential construction industry — which includes home builders and multifamily developers and remodelers — has experienced a skilled labor shortage,” explained Dr. Robert Dietz, NAHB’s chief economist. “In any given month, we’re short somewhere between 200,000 and 400,000 workers.”

Housing is one of the few sectors experiencing year-over-year job gains, as the industry has hired more workers in the wake of COVID-19, but it still has not been enough to meet the increasing demand for housing. Historically low interest rates are one factor driving this demand, but a geographic shift in where people are choosing to live is also affecting the housing industry, as lower-density areas become more popular.

“This is an acceleration of a trend that’s been in place for a while, driven in part by housing affordability challenges,” Dietz reported. “Buyers and renters were looking to move to markets that had better affordability conditions, and the virus crisis has essentially accelerated that trend.”

Construction data support this shift, he added, not only for single-family homes but multifamily developments as well.

“Policymakers should probably take note of these changes that renters and buyers have a greater opportunity to choose where they’re going to live,” Dietz noted. “And those markets that offer the best affordability conditions, and thus the lowest regulatory cost in terms of developing new housing, are going to grow the fastest in the wake of the coronavirus.”

See the video above for the full interview.

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