Despite rising in April, new housing construction had previously been trending down for several months. In fact, just one month earlier, housing starts fell to the lowest pace in nearly two years.
There are many factors leading to the slowing pace of home building, namely labor shortages and the rising cost of supplies, but there’s another factor that’s long been cited by homebuilders as one of the biggest standing in the way of more building: local regulations and the costs associated with them.
And now, homebuilders have a substantial new ally in their fight against local regulations, as Federal Housing Finance Agency Director Mark Calabria said Monday that municipalities need to begin cutting regulations in order to generate more home building.
“We have seen the power of de-regulation at the national level the past two years in everything from energy to health care to infrastructure,” Calabria said Monday. “Now, we need to apply those lessons to the homebuilding industry in localities across the country.”
Calabria spoke Monday at the Innovative Housing Showcase, which is being hosted this week on the National Mall in Washington, D.C., by the Department of Housing and Urban Development and the National Association of Home Builders.
In his speech, Calabria made his position on housing known.
“Housing is a basic necessity for all of us. But it also has a major impact on every aspect of our lives. Where we live and make our homes determines the people we know and interact with every day – our neighbors and friends. It affects our health, our education, and our careers,” Calabria said.
“And for many families, homeownership is the cornerstone of building wealth and pursuing the American Dream,” he continued. “I believe homeownership is one of the fundamental planks of a free society.”
But as Calabria noted, there are not enough homes being built to keep up with demand and need. According to Calabria, the average house in the U.S. is 35 years old, which is the highest that has been in nearly 100 years.
And as the NAHB has previously stated, governmental regulations account for approximately 25% of the final price of a new single-family home.
Calabria said Monday that he wants to do something about that.
“One of the biggest factors driving prices up and dragging supply down is the accumulation of burdensome government mandates and fees, zoning and land-use restrictions, environmental regulations, building codes, and permitting requirements,” Calabria said.
“This is a problem that homebuilders deal with every single day. And NAHB has studied it extensively over the years,” Calabria continued. “In fact, they estimate that the many layers of government red tape account for nearly a quarter of the price of a new single-family home and nearly one-third of the development and building costs of new multi-family properties.”
According to Calabria, in many cases, “steep regulatory costs” are actually preventing the construction of new housing in many cities.
And those are just the homes that actually get built. In many cases, steep regulatory costs prevent the construction of new housing in the first place.
“This is a national problem with local roots,” Calabria said. “The most burdensome regulations come from local governments. And typically, it is the wealthiest communities that hike up the regulatory costs of homebuilding the highest.”
According to Calabria, “states like California” are ground zero for this type of situation, with “many cities” upping the ante and “making it even worse.”
Calabria said that dealing with the county’s affordable housing shortage requires “organizing nationally and acting locally.”
Another factor, according to Calabria, is a shortage of skilled laborers needed to build housing.
“Part of the solution is simply to build more housing of all kinds. We need more single-family homes and more multi-family properties. And I know everyone here can support that. To build more houses, we need more builders,” Calabria said.
“In the past two years, we've seen roughly 600,000 new construction jobs across the country. That's definitely a good start to tackling the labor shortage that the industry has faced recently. But more work remains,” Calabria continued.
“America needs more bricklayers, carpenters, painters, iron workers, plumbers, and roofers – not just to build our houses, but to build our future. These are high-paying jobs. And they are highly rewarding jobs,” Calabria added.
“In the building trades, hardworking Americans find the dignity of work and the satisfaction of making what a family will someday call home,” Calabria said. “We need to lift up these careers. And we need to make sure the next generation sees them as viable and rewarding opportunities to earn a good living and help others pursue the American Dream.”
