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HUD Examines Causes Leading to Affordable Housing Shortage

The shortage of affordable housing and its attendant causes, including regulatory burdens and unchecked NIMBYism, takes center stage in the U.S. Department of Housing and Urban Development’s (HUD) latest issue of “Evidence Matters.”

The quarterly publication, which focuses on a singular theme and highlights policy-relevant research, takes a deep dive into the barriers that are stifling the industry’s ability to build America out of its affordability crisis.

According to “Regulatory Barriers and Affordable Housing: Problems and Solutions,” HUD Secretary Ben Carson in a recent speech to the policy advisory board of the Joint Center for Housing Studies of Harvard University indicated that part of the problem was a shortage of new construction.

In addition to other initiatives, Carson said HUD should “identify and incentivize the tearing down of local regulations that serve as impediments to developing affordable housing stock,” including “[O]ut-of-date building codes, time-consuming approval processes, restrictive or exclusionary zoning ordinances, unnecessary fees or taxes, and excessive land development standards [that] can all contribute to higher housing costs….”

According to the article, tight housing supplies in markets with strong job and population growth exacerbates affordability issues, and it’s in these locations that regulatory barriers like density limits and parking requirements, in addition to NIMBYism, constitute the leading reasons why supply is restricted and housing costs are higher.

Diving deeper into the costs of regulatory barriers and NIMBYism, HUD points at evidence that shows zoning and land-use regulations increase housing prices, reduce construction and decrease housing supply. Further, because housing prices have increased while construction costs remained steady during the past several decades, it’s reasonable to point at land prices as the primary reason for rising housing prices.

HUD writes that “research suggests highly regulated jurisdictions tend to have higher housing prices, with regulations discouraging new development or making it less dense while making the housing that is built more expensive.”

To reaffirm its point, HUD cites National Apartment Association’s own findings in its “Barriers to Apartment Construction Index,” which reveals a strong correlation between the severity of a city’s barriers to apartment construction and the percentage of households spending at least 35 percent of their income on rent. Further, HUD cites a National Association of Home Builders study that finds government regulations account for nearly 25 percent of the price of a home.

Following a examination of regulations, permitting and approval and NIMBYism, HUD offers several local strategies and policy responses, both general approaches and those that address specific barriers. HUD further highlights specific localities from San Diego to Leesburg, Va., that have taken steps to address these issues, and provide a valuable example for other jurisdictions to follow.

Specifically, says Lisa Sturtevant, Senior Visiting Fellow at the Urban Land Institute’s Terwiliger Center for Housing in the article, “local communities can review their existing policies, many of which were written decades ago, to ensure that they still apply under current conditions.”

Sturtevant cites parking ratios as regulations that may reflect dated assumptions, In fact, NAA recently released its newest research offering, “The Transformation of Parking,” which directly addresses this example, including ideas about vehicle use in localities that have greater public transit options, ride-hailing and residents’ decreased need for automobiles.

HUD ultimately says that “local communities have struggled to combat regulatory barriers,” but state and local governments can “take numerous approaches to shape zoning and regulation in a way that increases the housing supply and drives down prices to better meet the housing needs of their communities.”

NAA and its network of affiliates stands ready as a resource where it concerns affordability and the supply-demand imbalance. Please don’t hesitate to contact our government affairs team with any questions. You can also visit weareapartments.org, as well as naahq.org for more information on what you can do.