Why Building Homes Won't Actually Solve the Housing Crisis
As you may already be aware, the nation is currently in the middle of a housing crisis. Millions of Americans are finding it hard to get affordable housing, and the American dream of homeownership is out of grasp for many people. When discussing the housing crisis, the first solution people often recommend is " just build more houses!" However, experts fear this might not actually be all that helpful. There are a few reasons that the housing crisis cannot be fixed overnight just by building properties.
Urban Density Is a Key Barrier to Affordable Housing
A major problem for many people is that their housing options are limited to the region near their work, school, or families. This becomes a problem when the housing market in that region is already saturated. At a certain point, housebuilders cannot add more housing simply because there is not space. City infrastructure may fail to support multifamily housing, and the cost of land itself can keep developers from building in an area. As urban areas like New York and San Francisco become more and more crowded, it may become physically impossible to build enough houses for these regions.
Investors Are Wary to Get Involved in Development Right Now
When a crisis like the pandemic happens, one of the first changes to real estate is a decline in development. Investors who are unsure about what will happen next do not want to get involved in pricey homebuilding schemes right now. They risk potentially putting a lot of money into a property and then being unable to sell it for the previously estimated amount. Investors are especially cautious after the 2008 housing market crash. Following the housing bubble burst, many developers changed the way they do things. These regulations have helped keep many companies from going out of business, but it does make it harder to get new homes built.
Affordable Housing Is Often Blocked by Local Legislation
Unfortunately, politics can play a big role in the housing crisis. Often, building affordable housing relies on various government incentives, but political disagreements and bureaucracy can make it hard to actually get things done. Another big roadblock to solving the housing crisis is problematic zoning laws. Different areas need different types of homes, so in more urban regions, multi family homes are often needed to provide high-density housing. However, local zoning laws may block the construction of everything besides single family homes. Builders who want to meet local housing needs may just be able to build single family homes that do not actually provide enough housing. This is one of the major reasons that many believe the government should get involved in the housing crisis. By creating more construction friendly laws on a state level, it might be easier to provide the right type of housing.
Current Homeowners Don't Want Affordable Housing
A sad reality is that the housing crisis is made worse by those who already own homes. Many homeowners see their property as an investment, so they dislike the idea of anything that would lower their property values. While understandable, this sentiment puts a lot of barriers up that keep others from entering the housing market. Things like HOAs that regulate property size or collectives that vote against new development can make it far harder for affordable housing to be built. Instead, some areas may only allow luxury housing to be built. When locals cannot afford to purchase this housing, it may end up sitting empty while people who live in the area still struggle to find a home. The constant drive to raise property values higher and higher can end up pricing many out of the market and reducing the overall number of available properties.
COVID Is Interrupting Supply Chains
Sometimes, the challenge with providing more housing is not the fact that homebuilders are unwilling or not allowed to build houses. Instead, the issue can be due to breakdowns in supply changes. In areas especially affected by COVID-19, it may be hard to get a hold of lumber, tools, and other essential supplies. This can grind home construction to a halt, preventing the creation of any new homes. Though things will hopefully improve eventually, this may negatively impact many plans to provide extra housing.
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