Election Day is behind us, and the votes have been counted. Our region, like many others, is struggling with a housing affordability crisis. How our newly elected officials respond to this will determine the trajectory of growth and sustainability of our local economy. These men and women, who have just been elected to office at the local and state levels, have a unique opportunity to partner with our industry to make home ownership accessible to more of their constituents.
According to the Pew Research Center, the number of millennials surpassed baby boomers in the U.S. in 2019. This means there is a shift in the market toward millennials as first-time home buyers. Additionally, homeownership rates among minorities are seeing a downward trend over the last 15 years. And while baby boomers still hold the largest share of the market in homeownership, that demographic is facing a season of life with restricted income and rising healthcare costs. Our region needs more affordability and diversity in housing options.
Despite a stock market on fire, a booming economy, record low unemployment and high labor participation rates, the housing industry is struggling mightily to meet the surging demand for affordable housing. The increasing prices of land, building materials, and labor uncertainly play a role in exacerbating our housing affordability challenges. These issues are not insurmountable, but they are complex and will require a noticeable shift in local, state, and federal policies.
We cast our votes with the hope that our state and local governments will acknowledge and address the issues around housing affordability that face their constituents. According to the National Association of Home Builders, the cost of the regulatory practices of the government account for almost 25% of the price of a new, single-family home. This includes the costs at the local level as well as the burden of delays of antiquated systems and procedures that slow down construction and add to the overall cost of the home. Renters are feeling the financial ramifications of excessive regulations as well. One third of the building cost of a multi-family development project is a result of regulatory burdens and is passed on to the consumer.
It is important to note that the impact of local policies on housing costs isn’t a partisan statement – it’s one that has been recognized from many elected officials on both sides of the aisle. Additionally, our region is fortunate to have leaders within local government who recognize the impact that local policies have on the industry’s ability to meet the surging demand for affordable housing and are actively working to address those issues. We have seen significant progress in recent years but there is still much work to be done.