Opinion: 5 policy changes that can improve housing affordability

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The median home price in America is quickly becoming unaffordable for most first-time home buyers. This is especially true for minority families, who have less wealth on average than non-minority families. Like most things in our economy, home prices are influenced by the principles of supply and demand. An oversupply of homes lowers home prices while a shortage of homes for sale increases prices. It is fair to say that the current housing supply problem is at a critical level, which is due to the rise in house prices in recent years. It’s basic math, but how we got to this point is more complicated.

Residential zoning laws are designed to promote orderly development, control traffic flow, and ensure noise and activity levels are appropriate for each particular neighborhood. That’s all well and good, but they exist to raise property values ​​and limit growth, in part by establishing smaller lot sizes and limiting density. Years ago, zoning laws were used to legally separate local communities based on race. The Fair Housing Act made it illegal to segregate communities by race.

However, zoning laws can still segregate communities by wealth today. Housing affordability, one component of housing supply, is the biggest barrier to minority homeownership, and no issue is more of a barrier to increasing housing supply than zoning laws.

1. Start an affordable housing awareness campaign with government funding

Home equity It is the primary source of wealth for most Americans. Therefore, all home owners want their property values ​​to stabilize and increase over time. This flexibility means that homeowners often want their politicians to suppress the construction of new housing in their area. While most people think that everyone deserves a nice place to live, many homeowners don’t want a lot of rich people living in their neighborhood. This is called NIMBYism, short for the phrase “Not In My Backyard.” But most NIMBYism stems from ignorance. Elected officials set zoning and land use policies, and if these policies are less restrictive, homeowners should accept the idea of ​​increasing the amount of affordable housing.

This will only happen if homeowners believe that the influx of affordable housing will not negatively impact their property values, but will make their communities stronger. Evidence shows that affordable housing improves communities by expanding a healthy workforce and increasing tax revenue, which can be used to improve local infrastructure. A national awareness campaign about the virtues of affordable housing development is necessary to break the slow-growth or no-growth mentality held by most American homeowners.

2. Improving zoning and land use policies

Zoning laws across the country should be less restrictive and allow for more density. Smaller lot sizes mean more units can be built, and legalizing accessory dwelling units (ADUs) makes existing homes more efficient. Multigenerational families are more common among Hispanic and other minority communities. Homes with ADUs can be a great option for multi-generational families to use their money to buy a home. California recently passed SB 9: The California Home Rule, which makes it much easier for existing homeowners to build a second unit, or ADU, on their property.

Even as zoning allows for more affordable housing, homebuilders complain about the time it takes to approve new projects. In many communities, local planning commissions and boards can reject proposed projects even if they meet zoning requirements. Streamlining the licensing process can greatly increase supply Affordable housing.

3. Improving immigration policies to address labor shortages

Along with regulatory costs, the cost of land, lumber, and labor are the biggest factors associated with the total cost of building additional homes. Labor costs have risen in recent years due to construction labor shortages. More than 30% of the three million construction workers in the US are immigrants, and nearly 60% in Texas, California and Florida. of National Association of Home Builders He has been advocating for an amendment to our immigration policy that would “…allow employers to hire legal immigrant workers when domestic workers are in short supply.” There are over 11 million unfilled jobs in America today. The country’s growing labor shortage is slowing economic growth, contributing to inflation, interest rates and housing shortages.

4. Require government-owned homes to be sold to non-profits or owner-occupiers

Foreclosures have been low in recent years, but in down cycles, real estate owned by the federal government is a significant percentage of the overall market. Currently, more than 80% of the mortgage market is controlled by the government, which means that there will be many more houses owned by the government in the next cycle. These homes are often sold to investors who can afford to pay cash and foreclose quickly, but the unintended consequence of this is a low national homeownership rate. During the Great Recession, nearly six million homes were lost. Prohibition. During that time, the national homeownership rate has dropped nearly six percentage points.

Foreclosed homes are a great opportunity for first-time home buyers, and a particularly valuable opportunity to improve minority home ownership. The government should only sell homes to people and families and sell homes in need of repair to non-profits, which will renovate them and in turn sell them to owner-occupiers.

5. Reduce or eliminate capital gains tax when homes are sold to owner-occupiers

An idea that has been floating around housing circles is based on the theory that there are millions of existing home sellers who are unable to sell their homes because of the capital gains tax. Older homeowners may not need as big a house as they used to. Empty nesters who would rather live in small apartments or retirement communities face a huge tax bill if they sell their home for perhaps six times what they paid 40 or more years ago. Eliminating the capital gains tax for sellers who sell their homes to owner-occupiers will add a few million more homes to new homeowners over the next two decades.

Housing affordability does not improve by itself, and unfortunately, there is no lift or Policy Can solve the problem completely. To make this a reality, it requires the concerted efforts of local and national level stakeholders and policy makers. It won’t be easy, but it is imperative if we want our country to be a stakeholder that is dedicated to the well-being of our society and nation.



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