The price of buying or renting a home has skyrocketed in recent years due to increased demand during the pandemic at a time of low interest rates and government stimulus.
But one expert says housing price crisis Construction has been going on for decades, and local government policies are to blame for reducing inventory through heavy-handed regulations.
Michael Hendrix, a senior fellow and director of state and local policy at the Manhattan Institute, released a brief issue Thursday titled “How to Fight Housing Inflation: The Policy Menu for Stopping Government-Induced Housing From Spreading Beyond the Coast.” Local courts have contributed to the problem and what can be done to address it.
Analysis provided exclusively ahead of Fox Business’s release shows that home prices have increased by 44% over the past two years and Mortgage prices are up 60% Higher than a year ago, as the average selling price of existing homes is currently sitting above $400,000 on the roar of inflation.
This means that barely half the homes on the market today are within the price range of the average family income, making homeownership increasingly out of reach.
Hendrix notes that coastal cities have long had a price crisis that has now struck cities that were once affordable, but where heavy zoning requirements and other regulatory burdens are common for property owners and developers.
“It’s been on track for quite some time now but what’s different today is that America’s housing crisis has been raging since the start of the pandemic over the past few years,” Hendrix said. “What was once a coastal housing crisis has become an American housing crisis. And most importantly, it is spreading to parts of this country that were formerly strongholds of opportunity for hardworking families.”
Hendrix argues that over the years many communities have established restrictive, arbitrary regulatory frameworks that drive up the cost of building affordable housing and therefore prevent or even restrict such development.
He writes in his paper that “starter homes no longer exist as a functional category for home builders,” noting that in 1980, about 40% of new homes were 1,400 square feet or smaller, but as of 2019, The size of the entry-level home had fallen to just 7%.
“The general consensus is that we need to find space for about 4 million homes,” Hendrix writes. “But we are building far fewer homes than at any time since the Great Depression, choosing instead to operate with an ever-perpetuating housing stock in the meantime.”
Hendrix says that for decades, construction costs alone have remained relatively stable, but increasing requirements for expensive permits, environmental studies, legal representation to fight local property zoning and other restrictions have hindered development and increased home prices. happened. Restrictions on housing types, mandates on lot sizes, limits on urban development, overly strict building codes and more government driven factors also contribute to cost escalation.
The solution, he says, is for states to step in and provide some railings.
Cutting red tape is the first order of business set forth by Hendrix, which offers a range of options for protecting property rights through solutions such as ending arbitrary zoning actions, offering a Housing Appeal Board, and putting a timeline on permit approvals which are often pulled out. ,
Second-priority states should focus on providing “carrots and blackjack” when it comes to encouraging housing and outcome-based housing rewards, Hendrix argues, such as enabling local governments to be eligible for relevant state funds. There is a need to develop a comprehensive development plan for Accommodation.
Finally, Hendrix advocates streamlining local governments by lifting any discretionary review on permitting starter home development, simplification of building and design regulations, eliminating restrictions on housing types, and eliminating caps on residential building permits. .
Hendrix told Fox Business That fixing the current inventory problem is about much more than just “fighting over some obscure housing shortage numbers or mysterious land use law.”
“It’s a fight over the future of American families and whether they don’t have the space to take root, find a good job, and travel for hours to get there,” he said.