Tackling the growing problem of affordable housing shortages across the country has become a top priority for the National Association of Realtors this year and was the topic of conversation at NAR’s second annual Policy Forum on Feb. 6 in Washington, D.C.
With mounting barriers to affordability stymieing economic growth, thought leaders focused on strategies to reverse the housing shortage trend.
The panel was hosted by Pamela Hughes Patenaude, former Deputy Secretary of the U.S. Department of Housing and Urban Development, and included three guests: Matt Chase, executive director of the National Association of Counties; Kent Colton, a senior research fellow at the Harvard Joint Center for Housing Studies; and Steve Francks, CEO of the Washington Association of Realtors.
Colton highlighted five creative approaches to bringing more affordable housing online in 2020: technological innovation in homebuilding to expedite construction; preserving and creating affordable housing in neighborhoods; helping people qualify for mortgages through social programs; using existing lots and housing to provide greater housing opportunities; and passing legislation to remove regulatory barriers for homebuyers at the local, state, and federal level.
Panelists also discussed some of the hurdles homebuyers face as a result of dwindling affordability as well as some of the root causes for the shortage.
Colton highlighted a study by Freddie Mac Research that found that “the current rate of construction is about 370,000 units per year below the level required for long-term housing demand.”
Part of the problem is the cost of government regulations on housing, he said. These regulatory measures constitute roughly 24.3 percent of the total cost for single-family housing and 32.1 percent of the cost of multi-family housing, Colton said.
A labor shortage in the construction industry also has posed a problem over the last five years, according to the panel. Colton noted that increasing pressure to crack down on illegal immigration plays a large role in this labor shortage.
Francks emphasized how the pervasive shortage of housing was affecting communities across socio-economic lines in Washington state.
According to a housing affordability index report by the Washington Center for Real Estate Research at the University of Washington, 33 of the 39 counties in Washington noted that housing affordability was a significant issue, especially for first time homebuyers.
Francks added that many of the so-called “missing middle” properties ¬– starter homes and lower-priced condominiums – have seemingly disappeared. Denser multi-unit properties, such as condominiums, are not being built ¬– either at all in Washington’s case or at a fast-enough pace.
Francks noted his involvement in the Unlock the Door to Affordable Housing Initiative, which in recent years drafted and proposed a package of 16 bills at the state level in an effort to ease the affordable housing crisis.
Twelve of those bills were passed in the Washington State Legislature with “overwhelming bipartisan support,” which illustrates that the desire to address the issue crosses party lines, he said.
Chase noted that the lack of affordable housing across the country has left over a third of Americans cost burdened or extremely cost burdened.
He highlighted the issues at the community level that are contributing to the shortage: state governments making it difficult for their respective county governments to intercede on affordable housing issues; the huge influx of international buyers (such as private equity firms and sovereign wealth funds) on local economies; and the need for political, social, and economic incentives for people to build or convert properties into affordable housing.
All three speakers agreed that states have a great amount of power in leading the way to addressing the affordable housing crisis.
In the states of Oregon and in Minnesota, for instance, some local governments passed mandated zoning legislation that cut the construction of most, if not all, single-family homes. Those ordinances instead require the construction of multi-family properties such as duplexes and triplexes, in order to offer more affordable housing.