What can you do?
Lawrence Yun is the chief economist for the National Association of Realtors and in this months issue of the NAR magazine he addresses the issues around the rise of home prices and lack of inventory.
To sum it up for you, prices are rising because of the only thing non Econ majors remember: Supply vs Demand. Why can’t supply keep up? That’s where the plot thickens. Materials and labor cost have risen as well, but if there were more nice homes available, people would be willing to pay for the upgrade and free up their old home for first time home buyers.
The biggest hindrance to new home construction is bureaucracy. Dr. Yun suggests “advocating for accelerated new construction in your community.” He then goes on to list possible issues for you to suggest to your local government; for instance, reducing impact fees on new homes, reducing minimum lot sizes, expediting local review of plans, streamlining the permit process. It’s a great idea, but there are some issues…
1. Have you ever been really happy at the DMV? I mean, other than the day you waited 3 hours to get your first driver’s license? The planner’s office is no different. Don’t believe us? Send us an email and we will invite you along on our next attempted remodel or development.
2. Government never gets smaller. If citizens raise an issue, there will be new committees that write new code to “fix” the old code. It’s not run like a business and a bad Yelp review doesn’t help either.
3. Most citizens are happy in their neighborhood once they become a homeowner. You can’t be pro-affordable housing until you purchase a home, then spend the rest of your life shooting down developments at community council meetings.
4. Government has a monopoly and can charge whatever they want. Big companies like Facebook can search for a financially viable property, but small builders are stuck in the community they serve. The permitting fees and process are out of control. Again, if you don’t believe us, we will show you.
Although we are pessimistic about the prospects of governmental change, the economy is cruising along and homes are being built and sold. We are happy and things are great, but things could be amazing.