To the Wall Street Journal Editor: The Next Real Estate Crisis
Tuesday, March 27, 2018
March 27, 2018
To the Editor of the Wall Street Journal:
The Next Real-Estate Crisis: A Shortage of New Homes
We want to commend you for calling attention to the crisis in single family housing construction in your article on March 19, 2018. Ms. Kusisto rightly points out that this crisis is building month-by-month as new construction lags historical norms that go back at least 60 years – and that this crisis results from several now entrenched problems -- ten years after the financial crisis. But it’s not just a “new construction” crisis. Single family homes for sale in America have declined 32 consecutive months, and with interest rates rising, that trend won’t stop. These are major reasons why we find homeownership rates at 50 year lows! If we do not act now, it also will become another crisis – and a crisis of conscience for all of us.
At America’s Homeowner Alliance (AHA), the lead organization focused on these issues on behalf of current and future homeowners, it is our mission to protect and promote sustainable homeownership for all segments of America. As Ms. Kusisto points out, gainfully employed young people and low and moderate-income citizens are being shut out of homeownership because of this inventory crisis – and forced into a feudal relationship with landlords that our country has never before seen. We reiterate – we’re racing toward another housing crisis!
AHA has written about this issue numerous times and believes that to remedy this we need a concerted effort to take several bold measures now to halt the current deterioration. It’s our opinion this crisis will not get fixed without intervention. As an example, we need immediate changes to government policies that have resulted in a transfer of single family homes and resulting wealth from “Main Street” to “Wall Street”. These government policies instituted by government agencies are just flat wrong for everyday Americans. “Main Street” consumers are fed up and we reiterate . . . we’re headed toward another crisis.
To further halt the deterioration, at every level of government, the regulatory burden needs to be reduced. The National Association of Homebuilders’ study indicates the average compliance and regulatory cost to build the average home in America is $84,000 per unit. That’s unbelievable, unaffordable and unstainable. Whether these costs emanate from “not in my backyard” concerns, or the complicated processes related to environmental protections and other local, state or federal red-tape, we need to look at how the housing needs of today and tomorrow are being negatively impacted. We also need the agencies seized by the government in 2008 -- Fannie Mae and Freddie Mac -- to be held accountable to their charters and require that repossessed properties be offered first to owner-occupant buyers before they are sold to institutional investors, and to stop funding Wall Street firms that compete against single-family homeowners. We need the Trump Administration to include first time homebuyer incentives in their proposed $1.5 trillion “infrastructure package” to ensure that our workers can become homeowners. And we need policy changes at Fannie Mae, Freddie Mac and FHA to enhance credit availability by accepting more modern and predictive alternative credit scoring models and removing obstacles to financing more affordable units like condominiums.
If potential homeowners have no inventory from which to select, and more people are forced to rent, we’ll soon reach rent saturation and rapidly increasing (unaffordable) rent costs . . . so . . . one last time . . . it is not if there will be another housing crisis in America – it is when?
America’s Homeowner Alliance