Addressing Housing Affordability & Supply Needs
Housing affordability is one of the most critical problems facing home buyers and the nation. And the lack of housing supply is only adding to the problem. Comprehensive solutions to address this issue must be locally based and include local community experts — REALTORS® and REALTOR® associations. That’s why NAR has developed resources that work uniquely in each community to address the specific issues related to housing affordability and supply. Find valuable information and tools to start the dialogue in your community.
NAR's Housing Affordability Initiative
As part of the Issues Mobilization Program, the Housing Affordability Initiative is designed to assist state and local REALTOR® associations in proactively addressing your housing affordability problems. The Initiative offers a menu of services, from which you can pick and choose, to assist you in:
- Assessing your housing affordability situation;
- Developing ideas for addressing it;
- Laying a foundation with quality research;
- Drafting legislative/regulatory language; and
- Undertaking an issue campaign to achieve your goal.
Services offered under this initiative will be customized to fit your association’s needs.
Local Solutions to Consider
Raise Awareness of Housing Underproduction
Use NAR Research’s resources on this website to show how housing production per job growth in your metro area is lower than in the past. The articles below will provide background and help you frame the discussion with community stakeholders.
Bring People Together to Discuss the Issue.
- Greater Greenville REALTORS® Promote “Missing Middle” Housing
- Collaboration is Growing Affordable Housing in Richmond, VA
- Scottsdale REALTORS® Bring City Leaders Together to Plan for Smart Growth
- REALTORS® Promote Affordable Housing for the Los Angeles Workforce
Form Partnerships among REALTORS®, Builders, Local Government, and Non-profit Organizations.
Identify and reach out to organizations and government agencies that share a common goal.
Promote Accessory Dwelling Units
Accessory dwelling units make it possible for existing single-family lots to provide additional housing, typically one-or-two bedroom units, with lower construction costs than entirely new housing units on a separate lot. This policy would particularly benefit areas with limited land for development.
Many cities are relaxing their laws to make it easier to build second units in single-family-home neighborhoods.
Use Publicly-Owned Land for Affordable Housing Production
Most local governments own surplus land, which can be contributed toward projects developed in partnership with builders and non-profit housing developers.
- Urban Land Institute & National Housing Conference: Public Land & Affordable Housing in the Washington DC Region: Best Practices and Recommendations
Reduce Impact Fees and Streamlining Approval Processes
Impact fees may create additional hurdles to homebuilders, requiring additional funds to obtain permits.
- National Association of Home Builders: Development Process Efficiency: Cutting Through the Red Tape – This report shows the benefits and some case studies of streamlining development approvals.
Support Trade School & Apprentice Programs
The construction industry is experiencing a shortage of workers. Consider partnering with states and municipalities to support construction trades training in your local high schools and community college.
Update and Reduce Parking Requirements in Location-Efficient Areas
People own fewer cars in locations near public transportation or with other convenient options such as walking, biking, or ride-hailing. Reducing parking requirements can make it easier and less expensive for builders to build new housing. While these minimum requirements add an additional cost to the development, they should be updated to the current needs of the area to avoid overestimated demand.
- Parking Requirements Falling by the Wayside in Many Cities
- Adapting Parking Garages
- Transportation Report: The Trouble with Minimum Parking Requirements
- Star Tribune Blog: Minneapolis Relaxes Parking Requirements to Reduce Housing Costs
Work with Community Banks to Increase Lending for Housing Development
The Federal Home Loan Bank can provide reliable liquidity to community banks to support housing finance and community investment. For instance, they provide zero interest loan program for costs associated with start-up and feasibility analysis of mixed-use housing and economic development projects in Cincinnati.
- Federal Home Loan Bank: A Nation of Local Lenders
- National Association of REALTORS®’ Letter to the Federal Housing Finance Agency
Amend Housing Rehabilitation Codes
Consider amending rehabilitation codes that are designed to make it easier to renovate older structures by scaling building code compliance requirements to the scope of the planned work. Modernization and redevelopment of older buildings will be less costly for developers while building codes usually add significantly to cost of a project.
- HUD’s SMART CODES in Your Community A Guide to Building Rehabilitation Codes
- University of Pennsylvania’s New Codes for Old Buildings: Comparing Rehabilitation Codes and Evaluating Their Effects
- Smart Growth America: Update or Establish State Sub-code for Housing Rehabilitation
Reform Land Use and Zoning Regulations
Reform land use and zoning regulations to allow higher densities, including smaller lots for single-family homes, and more allowance for attached homes and multifamily development. This is one of the principles of smart growth. Local zoning codes should permit a range of housing types and densities. Allowing for mixed uses and higher densities can also make your neighborhoods more walkable.
- Does Density Matter?
- United States Environmental Protection Agency: Creating Great Neighborhoods: Density in Your Community
- National Association of Home Builders: How Did They Do It? Discovering New Opportunities for Affordable Housing
Updating Condominium Construction Defect Laws
Consider updating the condominium defect laws to increase the construction of condominiums. In part due to fear of being sued, builders are not constructing condominiums. Several states are tackling their condominium defect laws to make condo construction more attractive to developers.
Framing Housing Supply Shortage
Increasing Home Prices, Decreasing Inventory
Lack of housing inventory is considered the main reason that drives up home prices. Although new home construction has picked up, it is still not enough to accommodate the increased housing demand. In the last 6 years, home prices have increased 44%, while housing inventory has decreased by 13%.
Strong Economy, Low Unemployment, & Construction Permit Issuance
As the unemployment rate drops due to a strong economy, the demand for housing is expected to increase as Americans set their sights on homeownership. Data from NAR Research found that, historically, for every two new jobs, one single-family permit is issued. However, currently, a single-family permit is issued for every three new jobs. A ratio higher than the historical average shows that housing supply is still tight across the United States.