As a Savannah-based home builder with over 40 years of experience, I’ve seen that every year it gets more and more difficult to build entry-level homes.
I’m not alone. There are many reasons why builders across the United States have been unable to build affordable homes targeting critical first-time home buyers: rising costs caused by historically high price levels for lumber and other building materials, and supply chain bottlenecks that persist for two years after That the COVID-19 pandemic began, soaring interest rates, excessive regulations, extremely strict building codes, excessive zoning and density requirements, and a persistent lack of construction workers.
Since the beginning of the LB00 timber price pandemic,
Nearly 75% and is currently standing above $600 per thousand billboard feet even after posting significant declines in recent weeks.
While this has severely affected first-time home buyers, it doesn’t tell the full story. The average price of sawn lumber before the pandemic over 25 years (1995-2019) was $343 per 1,000 feet of plank. Lumber prices were $1,500 per 1,000 slab feet last May and have traded above the often unimaginable $1,000 mark for most of the past year.
As a result, on average, since spring 2020, lumber prices have added $14,300 to the price of a typical single-family home.
To mitigate this unprecedented rise in timber prices since early 2020, federal policy makers can begin to increase timber production from federal lands in an environmentally responsible manner. Today, timber production on the federal property is less than 2 billion slab feet; In the 1990s it was more than 10 billion slab feet.
With the United States dependent on Canada for roughly 30% of its lumber supply, the Biden administration could end the tariffs on Canadian sawnwood that the Trump administration imposed in 2017. The tariffs, which currently stand at 17.99%, are raising lumber prices dramatically. artificial and act as a tax on American home buyers.
On the tax side of the ledger, the 2017 tax law changed the mortgage interest deduction (MID) so that it is now a tax advantage primarily for wealthy homeowners. A better policy might be to cancel MID in favor of a $15,000, refundable, first-time home buyer tax credit to make home ownership more accessible for working-class families.
“ Rents have gone up because renters can’t afford to get into a beginner’s home. And those who buy an entry-level home can’t move up because no one can afford what was a home they had five years ago. “
On the employment front, Congress could push for more money for apprenticeships rather than focus on four-year colleges. A shortage of 449,000 construction workers nationwide has delayed home construction projects and raised housing costs. These are well-paying jobs (while the median wage in the US is $45,760, half of construction salary workers earn more than $49,000), and we need more electricians, plumbers, framing crews, and other skilled workers.
Then there is the high cost of the systems. Studies from the NAHB show that regulations imposed by all levels of government represent $93,870 – or 24% – of the median selling price ($397,300) for a new single-family home, and more than 40% of the cost of multifamily development.
Few would argue that safety standards for construction workers are not necessary, but these high regulatory costs raise questions about how carefully the government is thinking about consequences. One academic study, for example, found that it took an average of 788 days to prepare an application and get approved for an individual permit for a federal wetland.
Builders across the country often have to face delays of up to several months in starting new projects due to zoning and zoning requirements, slow permitting processes and opposition to NIMBY.
Local design standards that have nothing to do with safety are becoming common—requiring brick siding, for example, which can be nearly three times the cost of vinyl siding. Some localities require builders to allocate land to the government for parks or schools or leave it unbuilt in any other way. This cost should be offset in the price of the house.
Of course, most housing is local, and in many areas, less tangible factors such as community perceptions, expectations, and demands play an important role in determining the availability and cost of housing.
To help builders produce entry-level housing in local communities, state and local officials should eliminate inefficient zoning rules, low impact fees and other advance taxes associated with housing construction, speed up approvals for affordable projects, ease density and growth restrictions, and allow a range of types of housing. Dwellings, including multi-family.
These are practical solutions of paramount importance to enable builders to build homes at entry-level price points.
It is critical that we all succeed in this endeavor because the first time home buyer is the backbone of the entire buying process. Rents have gone up because renters can’t afford to get into a beginner’s home. And those who buy an entry-level home can’t move up because no one can afford what was a home they had five years ago.
The builders desperately wanted to capture this gigantic, underutilized market, but unfortunately it became increasingly uneconomical. Neither the public nor the private sector can face the challenge alone. But if officials at all levels of government apply the policy solutions outlined above, it will bend the rising cost curve and allow more builders to build more homes at price points that will allow more Americans to get their first rung on the home ownership ladder.
Jerry Kounter is founder and president of Counter Quality Homes in Savannah, Georgia, and president of the National Association of Home Builders.
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