<< Prices continued from Page 86 “In the past, people moved from rural
America to big cities because that’s where
That is not the kind of affordable
housing being discussed here. If the
median income needed to purchase an
area’s median-priced home translates
into residents needing to work 70 hours
or more a week to afford a home, then
that city does not have housing that is
affordable to the average family.
Jobs are being created in Silicon Valley,
for example, but potential employers
cannot find people who can afford to
buy or rent close enough to take those
jobs. This is not what people going
into the tech industry expect. They pic-
ture a prosperous future. They expect
to be able to afford a place to live near
where they work. They don’t expect to
have to commute six hours a day.
The problem is simple to describe.
If jobs are created in an area and the
people who have the skills for those
jobs cannot afford to live close enough
to get to work in a reasonable time,
those jobs will eventually go elsewhere.
If things don’t change, people will
have to commute longer distances on
more crowded freeways or pay high
prices for the privilege of living near
Another issue facing builders that impacts their ability to keep up with the
demand for more affordable options
are the regulatory costs of construction. The National Association of Homebuilders estimates that, on average,
government regulations account for
24. 3 percent of the final price of a new
single-family home. This is not a new
problem. In 2003, Professor Edward
Glaeser of Harvard University estimated
that 50 percent of the price of building
a condominium in Manhattan was
attributable to what he called a “zoning
tax,” wherein prices increased due to
regulations that restricted supply.
Higher housing costs have second-order effects as well. Higher costs translate into higher annual property taxes.
More money spent on housing also
reduces discretionary spending, which
means people have less to spend on
other things, which can impact an area’s
gross domestic product. High housing
costs relative to incomes restrain economic growth.
In addition, the effects of regulations
can prevent matching jobs with workers. Restaurant owners express dismay
at not being able to find waitstaff and
cooks who can afford to work close
enough to potential jobs to be able to
get there in a reasonable amount of
time. In the past, people moved from
rural America to big cities because
that’s where opportunities were. Regulations often now prevent that. Ultimately, these issues impact the
bottom line of everyone involved in
the housing industry.
Making housing affordable to more
people is entirely in the interest of
mortgage professionals. Higher ownership means more business and a
healthier economy as prices stabilize
and discretionary income increases.
It makes sense for originators and the
mortgage companies and lenders they
work for to get involved in this issue. It
comes down to this question: Do we
really want zoning that prevents our
kids from living in the city where we
grew up? ■