The housing price crisis can be alleviated through government reforms, says the expert

The price of buying or renting a home has skyrocketed in recent years due to increased demand during the pandemic in a time of low interest rates and government stimulus.

But one expert says the housing price crisis has been going on for decades and that local government policies are responsible for reducing inventory through heavy regulation.

Michael Hendrix, a senior member and director of state and local policies at the Manhattan Institute, published a short issue on Thursday titled “How to Combat Housing Inflation: Policy Menus to Stop Government-Induced Housing Problems from Spreading Beyond the Shore.” explaining how local jurisdictions have contributed to the problem and what can be done to remedy it.

New homes under construction in Arcola, Texas, United States on Tuesday, July 12, 2022. The average house price in the United States hit a record higher than $ 400,000 this year. (Photographer: Mark Felix / Bloomberg via Getty Images / Getty Images)

The analysis, provided exclusively to FOX Business prior to its release, indicates that home prices have risen 44% over the past two years and mortgage prices have risen 60% more than a year ago as inflation continues. to roar, with the median selling price of existing homes currently standing at well over $ 400,000.

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This means that barely half of the homes on the market today fall within the median household income price range, putting home ownership increasingly out of reach.

Hendrix notes that coastal cities have long had a price crisis that has now penetrated into cities that were once affordable, but where onerous zoning requirements and other regulatory burdens on property owners and developers are at a premium. ‘agenda.

“It’s been on its way for some time, but what’s different today is that in the past two years since the pandemic began, the US housing crisis has spread,” Hendrix said. “What was once a coastal housing crisis has become an American housing crisis. And most importantly, it is spreading to parts of this country that were previously bastions of opportunity for hard-working families.”

Hendrix argues that over the years many communities have put in place restrictive and arbitrary regulatory frameworks that drive up the costs of building affordable housing and thereby stifle or even prohibit such developments.

development of the territory

Aerial view of agriculture and suburban sprawl along Interstate-10 running through Pima and Pinal Counties, Arizona. (Photo by: Wild Horizon / Universal Images Group via Getty Images / Getty Images)

He writes in his article that “initial homes no longer exist as a functional category for home builders,” noting that in 1980 about 40% of new homes were 1,400 square feet or smaller, but as of 2019 level homes based on that the size had dropped to only 7%.

“The consensus is that we need to find space for about 4 million families,” Hendrix writes. “But we’re building far fewer homes than ever since the Great Depression, opting instead to settle for a decaying housing stock in the meantime.”

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Hendrix says that over the decades, construction costs alone have been relatively stagnant, but the growing demand for expensive permits, environmental studies, legal representation to combat local property zoning and other restrictions have hindered growth and caused the increase. of house prices. Bans on housing types, lot size mandates, urban growth boundaries, overly strict building codes, and other government-fueled factors also help drive up costs.

He says the remedy is for states to step in and provide some guardrails.

Reducing bureaucracy is Hendrix’s first agenda, providing a range of options to protect property rights through solutions such as ending arbitrary zoning actions, offering a housing appeals fee, and defining a timeline for permission approvals that are often dragged out.

homes

A contractor brings new doors to a home under construction in Antioch, California. (Photographer: David Paul Morris / Bloomberg via Getty Images / Getty Images)

The second priority states should focus on is providing “carrots and sticks” when it comes to housing and incentivising performance-based housing premiums, Hendrix argues, such as requiring local governments to develop a comprehensive development plan in order to qualify for the funds. government related to housing.

Finally, Hendrix advocates streamlining local governments by lifting any discretionary revisions on initial building permits, simplifying building and design rules, ending bans on housing types, and lifting limits on residential building permits.

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Hendrix told FOX that solving the current inventory problem isn’t just about “an obscure number of housing shortages or a fight for arcane land use law.”

He said: “This is the struggle for the future of American families and if they have a place to take root, find a good job and not have to commute for hours to get there.”

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