Ivy Zelman sits with Barron's for a Q&A on the current state of the housing market. Here's part of what she said about housing starts, the inventory shortage, the labor shortage and the scourge of impact fees (subscription may be required):
We are still 35% below a normalized level of starts, and that’s for a single-family. Every cycle is different. This cycle will be elongated, and the slope of the recovery is flatter than what we thought the trajectory would look like when we called the bottom in 2012. Builders have been slower to see the growth...We are predicting double-digit housing-starts growth this year, next year, and in 2018.
Large builders are only now shifting to more-affordable production...There are still issues with recruiting construction head count. Impact fees are another hurdle: In the Inland Empire [inland Southern California, away from the beach], you pay $50,000 to local municipalities, no matter what size the house is [to offset the added long-term school and infrastructure costs attributable to development], so builders can’t make any money. Houston has $2,000 of impact fees. There is a very clear correlation between housing starts where growth has been the strongest and where impact fees are the lowest.