The 1949 National Housing Act states “that the general welfare and security of the nation requires the realization as soon as feasible of the goal of a decent home and suitable living environment for every American family.” Seventy years ago, the nation’s leaders seemed focused on addressing the issue of housing shortage and affordable housing, whereas today it seems our government helps create many of the obstacles.
The National Association of Builder (NAHB) advises that increasing regulatory costs, the shortage of construction workers, tariffs on $10 billion worth of building materials, and concerns over housing finance have greatly reduced housing affordability. By working together through the GHBA, TAB and NAHB we can help get housing back on track. The first focus should be on overreaching and unnecessary government regulation.
According to NAHB reports, government regulations account for 25 percent of the price of a single-family home, and 30 percent of the cost of a multi-family development. While politicians speak about their commitment to affordable housing out of one side of their mouths, the other side is recommending increased regulation in a hope to get good press and stimulate some extra votes.
For example, on average households account for only around 20 percent of U.S. energy consumption, yet many states are mandating future energy policy of net-zero homes. This is an incredibly unfair burden for the new residential construction sector to bear without providing the equivalent benefit to our buyers. While new homes are already much more efficient than older homes, the additional steep cost to get to net-zero will almost never be recouped by the homeowner through reductions in energy bills while they live there.
Policies like this put homebuilders, developers, remodelers and our associate and affiliate members at a disadvantage before the job is even started. To further the challenge, there is a drastic shortage of workers which is exacerbated by ineffective immigration policy.
According to Lawrence Yun of the National Association of Realtors, in May only 4,000 construction jobs were added in the housing sector, yet another 200,000 construction jobs would be needed just to reach the prior peak employment in the sector. Anecdotally, today many are paying more than double the labor costs than they were merely 10 years ago and it is taking twice as long to build a home. Material pricing is also on the rise due to nationally imposed tariffs.
NAHB estimates that of the recently imposed tariffs on $200 billion worth of imports, over $10 billion are goods used by the homebuilding industry. They further estimate that the 2018 tariffs of 10% on these goods represented a $1 billion tax increase on residential construction and the 2019 tariff jump to 25% is equivalent to a $2.5 billion tax on housing. Beyond the costs to construct homes, issues with housing finance also aggravate the issue.
Home mortgages are less attainable than in years past. When homeowners do qualify, they may not be able to get a supporting appraisal because of the steep increase in new home prices compared to resales in the area. In addition, most appraisals don’t take in consideration the cost of compliance with government regulations such as energy upgrades, higher home elevations, etc. While some steps have been taken to address weaknesses in the mortgage market, there has been no meaningful progress in implementing comprehensive reforms to the housing finance system to ensure housing credit is available and affordable.
There are opportunities through the GHBA to help create effective change in many of these areas as well as to make our voices known.
For the trade shortage, the GHBA advocates for the Home Building Institute (HBI) which trains in a variety of trades, as well as several vocational academies, such as the Jones Academy. The GHBA Scholarship fund invests in the children of association members to aid in educating tomorrow’s industry leaders.
The HOME-PAC and a multitude of GHBA political engagements allow a variety of opportunities to ask for more effective immigration policy, support of trade-related educational opportunities, lobby for finance support, and to have a voice in tariff related policy.
We also have a very active Government Affairs Committee through our local, state and national associations to keep up to date on policy affecting the industry as well as establishing an avenue for a unified voice against over-reaching and unnecessary regulation.
Let’s work together for a common goal of affordable housing. What will you do to protect our industry, our country, and help get housing on track? Your local economy is counting on you!
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