We have seen local governments change course over new housing policy. They have been moving away from “nimbyism” and “anti-growth” mentalities to pro-active solutions to meet the housing needs of their communities.
We have recently seen states like California introduce ambitious goals for new housing and push hard to make it a reality, so much so that the state’s governor, Gavin Newsom, has filed lawsuits against the city of Huntington Beach for failing to develop an affordable housing plan.
California has even created a state pilot program to completely bypass local permitting requirements on accessory dwelling units to reduce the costs and time to complete.
I find it interesting that the average American doesn’t seem to be aware of what led us to this crisis, which has firmly placed the American Dream out of reach for many.
Depending on where you live, individual drivers such as government regulation have played the largest role in housing affordability. Recent studies by the National Association of Home Builders have shown the cost to build a home has increased by more than 25%.
Across the United States, permitting and local government fees swing from a few thousand dollars and a couple of weeks to obtain, to some areas where it can be closer to $100,000 and take years just to get permission to build a home on land that already meets the zoning requirements. These are just a few of the many examples that have led us to our current housing crisis.
As June 26, President Donald Trump signed an executive order to tackle the lack of affordable housing and make it a priority to remove red tape. This can have a meaningful impact on every family and is long overdue. Growing up, my father always said, “Occasionally and eventually, the federal government can get it right,” and today this couldn’t be more relevant.
The Department of Agriculture has introduced a new renovation program and, more importantly, a completely revolutionary new construction program.
The Department of Veterans Affairs has provided better clarity in its guidelines to make it easier for lenders to make renovation loans to veterans.
The GSEs, Fannie Mae and Freddie Mac, who have been under government conservatorship since the financial crisis, has made major strides in trying to provide affordable financing options. Fannie Mae has made significant improvements to its HomeStyle Renovation program to make home ownership possible for more consumers that need to make improvements on existing homes. And just within the last few weeks, Freddie Mac rolled out a completely new consumer renovation loan program.
Each of these changes from both the GSEs and government agencies makes a difference in either adding new housing inventory or prevents our existing inventory from becoming obsolete.
We are now seeing change in the finance industry and every level of government. Looking into the future, we will still have a massive shortage of inventory and it will take years to start moving the needle.
It’s been said that the affordable housing crisis is a generational problem and that stands true today. I believe that we have now hit the tipping point and families will begin to have more affordable housing options.