How Can Housing Become More Affordable?

This subject has become even more pronounced as younger generations seek to buy or rent a home and older generations are staying in their homes a lot longer and living longer lives at home, thereby causing shortages in many parts of the country. So what is the solution to affordability? Build lots? Here are some of my thoughts:

1.  Technology can fuel mass production. It is much more cost-effective to mass-produce large pre-fabricated parts of homes in a factory than on-site.

2.  Speed.  The faster a home can be built, the fewer costs are incurred for financing projects. Financing costs eat up a lot of profit and drive prices higher. Technology can fuel speed. Simplified regulation and inspections can speed things up too.

3.  Regulation. Many regulations are essential in maintaining a healthy environment and delivering a quality product.  However, well-intentioned regulations are too often poorly communicated and fail to clearly define what their expectations and requirements are. Simplifying and streamlining regulations so that they are easy to understand and quick to implement is key. Tariffs on imported building goods have made construction costs climb in recent years. Sourcing from competitive global markets can ease costs notably.

4.  Inspections.  Many governments are painfully inefficient and slow.  Some are corrupt. The inspection process is often cited as a key driver of delays….and costs.

5.  Labor Laws. Most labor laws are very well-intentioned and 100% rational and justifiable.  Some are not. Some laws have been created purely to benefit a few at the expense of home-buyers. These costs are passed onto the consumer. Sadly, the result is some technologies are doing everything in their power to replace as much labor as possible from the construction process.

6.  Land-use and Zoning.  Zoning and land usage laws need to be simplified and streamlined. Land costs are extremely expensive in areas and drive housing costs through the roof. Smart zoning is critical to a healthy society and thriving communities. Limiting buildable land will always drive costs much higher.

7.  Government Assistance. Government fueled incentives work in driving construction activity. Whether we like it or not, developers do what they do to make a profit.  Naturally, some are greedier than others. The reality is building an expensive home often takes as much time and effort as a cheaper home yet delivers more profit:  until this issue is resolved, there will always be shortages of affordable homes.

8.  Financing. Affordable financing for construction and purchasing is important. If someone can pay rent – and must pay rent wherever they live – surely rent-to-own programs and smart buying assistance programs can be improved?

9.  Density. Yes, density has its efficiencies that cannot be ignored.

10.  Scaling back expectations. Too many first time home buyers and renters have unrealistic expectations of what they ‘should’ be able to buy. Maybe starting out with a more basic home that has the capacity to be expanded over time (easily) and once you can afford to do so would be better?

11.  Taxation policies. Smart tax policies with clearly defined contractual obligations can be very effective in driving activity and affordability. First-time buyer tax breaks have worked in the past.

12.  Incomes.  Unless incomes keep pace with rising costs, affordability will always be a problem. While governments can ‘subsidize’ this, it may be better – and potentially cheaper – if people were simply paid more to be able to afford the market-rate housing. The government does not make money – it collects money from taxpayers. I look forward to the day when more billionaires put their names (and money) on affordable housing projects…that would fuel an incredible legacy!!

Anyway, those are just some of my OPINIONS…..I feel certain there are other, better ideas. We all need to view housing affordability as a necessity moving forward if we wish to have stable, healthy, and thriving villages, towns, and cities.