______________________________________________________________________________________________________ Real
Estate
Creating communities
Why builders can ’ t build affordable entry-level housing and how to fix it . By Ben Caballero
America ’ s No . 1 real estate agent proposes three innovative solutions to the nation ’ s shortage of affordable housing . They would lower costs while creating future longterm tax income for municipalities , would not increase the tax burden on citizens , and would not require state or Federal subsidies .
America faces two interrelated housing crises simultaneously : an affordability crisis and an inventory crisis . Home builders are often in the crosshairs of housing advocates , who blame them for causing both .
Those accusations are misplaced and unfounded .
Builders can ’ t build affordable entry-level housing because governmental entities have used housing production as an incomeproducing opportunity . In effect , these fees , plus the increased costs to builders from approval delays , have created an invisible tax on American homeownership . This is the root of our inventory crisis .
The housing inventory crisis
You can ’ t discuss the affordable housing crisis without talking about the housing shortage . In May 2021 , after watching new housing inventory creation plummet for a decade , I sounded the alarm with an opinion piece for the real estate trade outlet , Inman News , ‘ How long will the housing shortage last ? Years - here ’ s why .’
The US Census numbers tell the tale : between 1959 and 2006 , builders completed 52,941,000 homes , an average of 1,102,938 homes per year . However , between 2007 and 2020 , builders started an average of only 708,186 homes per year , creating an annual shortfall of 394,752 homes . Based on this historical average , a housing inventory shortage of 5,526,525 homes was created .
The good news is that from 2021 to 2023 , 4.56 million home starts created an average of 1.52 million homes per year .
The bad news is that with a 5.5 million housing inventory shortfall , even if builders could maintain an average of about 1.5 million homes a year , it would take them nearly 14 years to erase our housing deficit .
If US builders could dramatically increase building starts and average two million homes a year , we would achieve a balanced housing market and erase the inventory deficit in about six years . To solve the nation ’ s inventory problem , home builders must be recognized as the solution to our housing shortage rather than as a problem or an income opportunity .
The housing affordability crisis
America is facing what many housing leaders are calling ‘ the worst housing affordability
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