New-home construction levels have failed to keep pace with population growth, shifting demographic preferences, and the aging housing stock. Evidence of the shortage is reflected in the quickly rising rental rates and home listing prices due to the deficit of homes for sale. The U.S median existing-home sales price in March 2019 was $259,400, which marked 85 consecutive months of year-over-year price gains.
“We have a growing population, and we need more housing to accommodate it. There is a good probability for solid home sales growth once the supply issue is addressed”, says National Association of Realtors Chief Economist.
There are multiple approaches to addressing the inventory shortfalls:
- Work with builders and developers to create more inventory
- Work with municipalities and government agencies to help the community overcome the “not-in-my-backyard” mindset
- Become stronger voices for the zoning and regulatory changes many governments are weighing as a way to increase housing affordability and density
Increasing new home construction sounds like the most obvious solution to inventory shortfalls, but there are obstacles such as impact fees and regulations that limit new construction densities. Builders also face ongoing reliable labor shortages and rising building costs. Another possible route is pre-fabricated housing (homes partially built in factories) that would allow builders to add inventories at a lower cost and possibly trim construction time in half. The challenge is overcoming the stigma that “prefab” housing sacrifices quality and style, especially in luxury and “hip” markets such as Miami, Los Angeles, NYC, and the likes.
Find an opportunity zone. Some real estate professionals are leveraging opportunity zones which provide for large tax breaks and show investors how to add housing and revitalize areas that were once down and out and cast aside. The opportunity zone program, birthed in 2017 vy the federal income tax overhaul, offers tax breaks to investors who purchase an improve property n one of about 8,700 areas nationwide. Investors can reduce or postpone taxes on their profits from sticks, businesses, or investment partnerships by reinvesting those funds into these areas.
Be a voice for change; a change agent. Ultimately, we must play a role in guiding the conversation and offering assistance versus simply complaining. Grants, for example, can be used to conduct multi-day problem solving workshops — sometimes called charrettes — to bring city leadership, architects, develops, and residents together to address the aging housing stock and lack of affordable housing. Leaders at the gatherings are to examine a specific target are, draw up plans for revitalization, and present the plan to lawmakers.
Addressing the need for affordable housing is a mission for impassioned development and real estate professionals. Contact us to learn how Apexa may be able to assist engage community stakeholders and enlist everyone to join the fight towards a sustainable solution for lasting change.