NAHB Creates Local Strategy Reports to Address Affordability

The organization has compiled extensive research on state and local policies that are helping to make housing more affordable.

Everybody needs a home; it’s a universal requirement that connects us all.

It follows logically that everyone needs a home that they can afford and that meets basic health and safety standards. Consequently, we all have a stake in helping to ensure that housing is affordable.

Yet owning or renting a suitable home is increasingly out of financial reach for many households. Almost one-third of the nation’s households are cost burdened and pay more than 30% of their income for housing.

The quarterly NAHB/Wells Fargo Housing Opportunity Index, which has been trending down, paints a similar picture. The index was 56.6 in the last quarter of 2018, meaning that just over half of the homes (both new and existing) sold nationwide in the quarter would be affordable to a family earning the median income. In many of the more than 200 markets surveyed, far less than half of the homes sold in the last quarter were affordable to families earning that area’s median income.

As builders, we know the cost of housing is determined by a complex interaction of factors including labor and materials prices; interest rates and financing costs; federal, state, and local regulations; and supply and demand.

NAHB analysis shows that regulatory requirements alone account for 25% of the cost of constructing a single-family home, and even more of the cost of a multifamily unit. Zoning, fees, and the approval process are key factors making it difficult to increase the supply of affordable housing and ensure that it meets the needs of today’s households.

Finished Floor Space in New Homes

In the average new home, 28% of the finished floor space is allocated to bedrooms and 11.2% to the kitchen area, according to a recent NAHB study based on questions appended to the November 2018 survey for the NAHB/Wells Fargo Housing Market Index.

In addition to an average breakdown for all new homes, the study also looked at small homes (under 2,000 square feet of finished floor space) and large homes (3,500 square feet and up). The share of space allocated to many areas in the survey varies only slightly with overall home size. The dining area, for example, accounts for close to 6% of the finished floor space in new small and large homes.

The master bedroom accounts for a larger share of the space in small new homes (13.1%) than in large ones (9.2%); other bedrooms account for roughly 17% of space irrespective of house size.

In small homes, the kitchen has a slightly greater share of finished space (12.7% vs. 10.5% in large homes), but this tendency does not extend to breakfast nooks and walk-in pantries. Find the full study at nahb.org.

In many areas, less tangible factors such as community perceptions, expectations, and demands also play an important role in the availability and cost of housing.

Given the complexity of the product and the many elements affecting it, there is no single one-size-fits-all solution to the challenge of making housing more affordable.

Solving this problem requires myriad strategies and a variety of tools that can be used alone or in combination to reduce costs, boost supply, and empower aspiring home buyers. It also requires innovative approaches.

To encourage builders and communities to work together, NAHB has compiled extensive research on state and local policies and incentives that are being used across the U.S. to help make housing more affordable. These credentialed reports focus on key strategies including those related to planning, zoning, and subdivision requirements, cost waivers and reductions, partnerships, and more. You can find them online at NAHB.org/HousingForAll.

I urge every member of our industry to visit this important resource and determine if some or all of these strategies could help make homes more affordable in your market. There’s even a downloadable brochure to help spread the word about this resource.

I don’t think any of us have any illusions about the difficulties involved in making housing more affordable. Applying the collaborative strategies and lessons learned from what NAHB has compiled can help us ensure that everyone has a home they can afford.

For more on this topic, contact Debbie Bassert, assistant vice president of land use and design, at [email protected].