As COVID-19 hammered the U.S. economy, governments pushed money toward groups needing a hand: the unemployed, business owners, renters and homeowners.
In fact, federal legislation currently abounds to help first-time homebuyers, first-generation homebuyers, and teachers and first responders get into a home, reports HousingWire, an online news site focused on the mortgage and housing markets.
But here’s the rub: Not enough affordable housing is available to meet the demand.
“Clearly, helping people to buy more housing is a good thing … [but] where is that housing stock coming from?” asked John Beacham, founder and CEO of Toorak Capital Partners, a New Jersey investment firm that partners with lenders to provide capital to real estate investors wanting to renovate or build housing.
“If you’re throwing money at a segment of the market where there’s not a lot of supply, you can’t make more … It’s not solving the core issue; it’s just bidding up the prices of the units,” he opined as a panelist last week at a webinar on affordable housing and underserved markets hosted by HousingWire.
When the pandemic struck, the U.S. already lacked as many as 3 million units of affordable housing, said panelist Simone Beaty, director of single-family affordable lending initiatives at Freddie Mac, a government-sponsored entity that helps supply liquidity to the housing market.
“Affordable” is defined as housing that consumes no more than 30 percent of an occupant’s gross income.
Housing inventory is low across the country, according to the latest report from the National Association of Realtors, and first-time buyers in particular are having trouble breaking in.
Part of the reason for that, Beaty said, is the rising cost of labor and materials. COVID, too, added to the pain by creating shortages.
Beacham, though, sees another culprit: local rules and sentiment that keep some types of housing at bay, including multifamily, which his company helps to finance.
“We need to really focus on breaking down laws that are stopping us from building housing in this country,” he said, noting by example his New Jersey hometown, where multifamily units need the blessing not only of the zoning board but the school board, too.
He pointed to legislation in California, which now allows some owners of single-family homes “as of right” to build a second dwelling on their lot without local say, as a way to create density to ease the housing crunch.
“These are things that have to be taken away from local jurisdictions … in order to get more housing in this country as soon as possible,” Beacham said.
Sprawl – “building to the edge” – isn’t the answer to the shortage, and neither is single-family housing alone.
“We need to figure out a way to go towards two-family, four-family, multifamily units … because that’s the way we’re going to get more housing in our existing space,” Beacham said.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]
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