When there is a deficit between household formations and housing construction, we must understand that this is not just an industry issue but a huge societal one.
The Wall Street Journal reports that housing starts in the state of Oregon have fallen to a 50-year low. Oregon has some of the most restrictive housing land use and rent controls in the country and is ranked low in affordability.
The Denver Metro Association of Realtors® reports that inventory in December 2019 fell to less than 5,100 active listings —in a market with nearly three million citizens (and over 15,000 real estate professionals).
Yet, the city of Denver and some surrounding communities continue to enforce draconian building codes on those building attached housing.
California, which has some of the nation’s lowest affordability factors, added a new requirement—that all new homes must have solar power on rooftops, adding costs to each home estimated at $6,000 to $9,000 (or more) per home.
Many states seem to think that regulating builders and investors will somehow increase the supply of homes and raise the affordability for families. Current facts on the ground suggest otherwise.
It seems like the political class thinks that restraining supply is the way to increase supply, which of course, makes no sense and does nothing to acknowledge how those who can build or invest in housing react to such incentives.
It would also seem to me that the Realtor® organization, together with the mortgage, building, and other housing-related trade associations, would be pouring all of their efforts into getting important facts to local and state politicians about this current crisis. It’s not just a current crisis; it’s been building for a decade, and it’s not going to get better. When there is a deficit between household formations and housing construction of 250,000 to 400,000 units per year, someone needs to wake up and understand that this is not an industry issue (which it is) but a huge societal issue. Left unaddressed, or not confronted, our country will run out of places for our citizens to live.
Lastly, this is not just a Realtor organization issue. At the national and local levels, brokerage firms need to get involved. Not only because it is in our best interests for our business, but because it is the best interest of families everywhere.