Opinion: I’ve been building homes for 40 years, and here’s what needs to change if the US wants more starter homes


As a Savannah-based home builder with over 40 years of experience, I’ve found that every year entry-level homes are getting harder and harder to build.

I’m not alone. There are many reasons why builders across the United States are unable to build affordable homes for the critical first-time home buyer: rising costs resulting from historically high price levels lumber and other building materials, supply chain bottlenecks that still exist two years into the COVID-19 pandemic, soaring interest rates, excessive regulations, overly strict building codes, excessive zoning and density requirements, and a persistent lack of construction workers.

Finding and enacting solutions to these housing issues is essential to meeting the housing needs of all Americans. Decision makers at all levels of government will need to make housing a top priority.

Since the beginning of the pandemic price of LB00 wood,
are up nearly 75% and currently sit above $600 per thousand board feet, even after posting significant declines over the past few weeks.

While this particularly affected first-time home buyers, it doesn’t tell the whole story. The historical average price of lumber over 25 years before the pandemic (1995-2019) was $343 per thousand board feet. Lumber prices were $1,500 per thousand board feet last May and have been trading above the once unthinkable $1,000 mark for much of the past year.

Thus, on average, since the spring of 2020, lumber prices have added $14,300 to the price of a typical single family home.

To mitigate this unprecedented spike in lumber prices since the start of 2020, federal policymakers can start by increasing lumber production on federal lands in an environmentally responsible way. Today, timber production on federal property is less than 2 billion board feet; in the 1990s it was over 10 billion board feet.

And since the United States depends on Canada for nearly 30% of its timber supply, the Biden administration can end the tariffs on Canadian timber imposed by the Trump administration in 2017. The tariffs, which currently rise at 17.99%, artificially increase timber prices. and act as a tax on American home buyers.

On the tax side of the ledger, the 2017 Tax Act changed the Mortgage Interest Deduction (MID) so that it is now a tax benefit primarily for wealthy homeowners. A better policy would be to abandon the MID in favor of a $15,000 refundable first-time home buyer’s tax credit to make home ownership more accessible to working-class familiess.

Rents are rising because tenants cannot afford to move into a first home. And first-time home buyers can’t scale because no one can afford what was an entry-level home five years ago.

On the labor front, Congress can ask for more money for job training instead of focusing on four-year colleges. A nationwide shortage of 449,000 construction workers is delaying home construction projects and driving up housing costs. These are well-paying jobs (while the median US salary is $45,760, half of construction workers earn more than $49,000), and we need more electricians, plumbers, framing crews and other skilled workers

Then there is the high cost of regulation. Studies published by the NAHB show that regulations imposed by all levels of government $93,870 — or 24% of the average sale price ($397,300) of a new single-family homeand more than 40% of the cost of multi-family developmentst.

Few would argue that safety standards for construction workers are unnecessary, but these high regulatory costs raise questions about how far the government is considering the consequences. An academic study, for example, found that it took an average of 788 days to prepare a submission and receive approval for an individual federal wetland permit..

And builders across the country often face delays of up to months in starting new projects due to zoning and subdivision requirements, slow permitting processes and NIMBY opposition. .

Local design standards that have nothing to do with safety have become commonplace – requiring brick siding, for example, which can cost almost three times the cost of vinyl siding. Some localities require builders to dedicate land to the government for parks or schools or otherwise leave it unbuilt. This cost must be recovered in the price of the house.

Of course, most housing is local, and in many areas less tangible factors such as community perceptions, expectations and demands also play a large role in determining housing availability and cost.

To help builders produce entry-level housing in local communities, state and local authorities must roll back ineffective zoning rules, reduce impact fees and other upfront taxes associated with housing construction, expedite approvals for affordable projects, easing density and growth restrictions and allowing a range of housing types, including multi-family.

These are practical solutions that are paramount to enabling builders to build homes at entry-level prices.

It is essential that we all succeed in this business because the first-time home buyer is the linchpin of the entire buying process. Rents are rising because tenants cannot afford to move into a first home. And first-time home buyers can’t scale because no one can afford what was an entry-level home five years ago.

Manufacturers desperately want to capture this giant market which has not been sufficiently exploited, but which is unfortunately becoming more and more unexploitable economically. Neither the public nor the private sector can meet the challenge alone. But if officials at all levels of government put in place the policy solutions outlined above, it will bend the rising cost curve and allow more builders to build more homes at prices that will allow more Americans to get their first rung on the homeownership ladder.

Jerry Konter is the founder and president of Konter Quality Homes in Savannah, Georgia, and the president of the National Association of Home Builders.

More from MarketWatch

Rents just hit a new high, but renting is still cheaper than owning. Here’s why.

The solution to the construction labor shortage? Women and immigrants, according to a Harvard researcher

Cities where housing costs are likely to fall: ‘We’ve reduced a decade of house price appreciation in a year and a half’

Only 10% of new homes now sell for less than $300,000. Two years ago, a third did. It’s not just because of the pandemic.


Comments are closed.