EDITORIAL: Ease permitting, restrictions to boost housing
May 19-It is no surprise that relatively few starter homes are being built in the United States. Still, a recent article by Columbian reporter Mia Ryder-Marks includes some eye-opening facts.
Among them:
* During the 1980s, starter homes accounted for 40 percent of new construction in the United States. Now, they make up 7 percent, according to the Home Buying Institute.
* In 2006, the average tenure in a home was six years. Now, it is 12 years, according to Redfin.
* In Vancouver, the median home sale price has increased 111 percent since 2006; by comparison, cumulative inflation during that period has been 65 percent.
The result? The average first-time homebuyer in the United States is 40 years old; as recently as 2020, the average age was 33. And the National Association of Realtors reported last year that first-time homebuyers account for 21 percent of homeowners - a record low.
The long-held stereotype of young adults purchasing a small home then moving on after a few years while making way for the next young adult no longer applies.
For those living comfortably in what they hope is a forever home, this might not be an issue. But as Denny Heck recently told The Columbian's Editorial Board when discussing housing policy: "I'd like to spotlight the starter home - because it's the one that constipates the market."
Heck, Washington's lieutenant governor, points out that a lack of middle housing leaves relatively few options for people looking to make their first home purchase and relatively few options for those looking to downsize and make room for families in larger homes. And when supply does not meet demand, it drives up prices for homes of all sizes.
The situation diminishes economic mobility in the United States and contributes to issues such as homelessness, inequality and our basic understanding of the American Dream. And it is the result of a conflux of policies over the span of several decades.
For example, a 1977 budget proposal from outgoing President Gerald Ford called for Congress to fund construction of 506,000 housing units. By 1996, under the Clinton administration, federal funding supported construction of fewer than 9,000 new housing units - less than 2 percent of the number from two decades earlier.
The federal government has gotten out of the homebuilding industry, leaving the task to the free market. But the free market has not responded, in part because of state policies that reduce the profitability of building starter homes.
As CNBC reported last year: "Experts say that restrictive zoning laws found around the country are to blame. These laws are set at the local level and dictate what can be built where. These laws have increased the cost to build homes of any size, eroding affordability for buyers in the process."
That has broad economic impacts. Homeownership traditionally is the most efficient method for Americans to build wealth; they purchase what qualifies as a starter home, build equity as that home increases in value, and then move to a more expensive home that builds equity at an even faster rate. Policies that impact homebuilding have largely eliminated a crucial step on the ladder to economic security.
State and local governments must recognize this and ease permitting and land restrictions - regulations that make midlevel housing unprofitable to build. As Heck told Washington State Standard in April, "We're not doing a very good job at all, because the hole is getting deeper."
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