Five ways to solve the housing shortage problem

Among many problems pressure on voters This election was driven by the ongoing housing shortage. Depending on who you ask, the US economy needs something between 3 million And 7 million more housing units than are available, including homes for rent and for sale. The good news is that there are many solutions available at the local, state and federal levels. While it’s too early to tell what President-elect Donald Trump and the next Congress plan to do, here are five ideas from a number of housing experts.

1. Legalize diversity in housing

“We can just start making it legal to build more types of homes in more places,” said David Garcia, policy director for Up for Growth, a housing advocacy group that recently assessed the housing supply gap at 3.85 million homes.

Most residential land in this country is zoned for single-family detached homes, and restrictions such as minimum lot size, square footage requirements, and height restrictions make it very difficult to build anything else. Simply allowing more apartments and duplexes, as well as backyard cottages known as accessory dwelling units, would make a big difference, Garcia said.

“So this is something that can be done to open up supply of a really popular type of housing that won’t cost any money,” he said. “It’s really just a change that either the city itself or the state legislature could make.”

But many homeowners and their elected officials are resisting zoning reforms that could change their neighborhoods, which brings us to another solution proposed by Lisa Rice, CEO of the National Fair Housing Alliance.

2. Encourage zoning reform

Rice said tying federal money for housing and community development, transportation — even disaster relief — to zoning reform could encourage officials to do more.

“Congress could say something like, ‘Look, if you represent a community that builds its fair share of affordable housing, when we have a disaster, you’re first in line,'” Rice said. “But if you have all these zoning regulations … you can pay for some things yourself.”

3. Reduce tariffs on Canadian lumber

“We’re adding thousands to the cost of building a new home because of a spat with our closest ally,” said Salim Furth of the Mercatus Center, a free-market-oriented think tank at George Mason University.

The spat dates back to the 1980s, when American logging companies complained that their northern competitors were being unfairly subsidized by the Canadian government. After a long truce, the Trump administration introduced new tariffs on Canadian imports lumber in 2017, and the Biden administration has continued this policy.

“I understand the idea of ​​protectionism towards China and that free trade goes against security,” Fuerth said. “There is no compromise on safety with Canada and the implications are huge in terms of the cost of building new homes.”

4. Capital gains tax moratorium for first-time home-selling investors.

This project, designed to help more people become homeowners, is the brainchild of Laura O’Connor, a real estate consultant. While we hear a lot about large institutional investors buying up single-family homes, she said, most are owned by smaller landlords with fewer than 10 properties, and many of those owners may not even want to be landlords.

“Today, a significant number of investors are casual,” O’Connor said. “They inherited the house; They don’t know what to do with it.”

But if they sell that home, their tax bill could be 15% or 20% of the proceeds. If Congress suspends that tax for a year or two, O’Connor said, “we can push (investors) to take these properties and turn them into something that feeds an entry-level buyer.”

5. Convert unused office space into housing

As COVID-19 has changed the way we work, office vacancy rates remain high, said Reed Hundt, CEO of the Green Capital Coalition. But retrofitting buildings requires expensive plumbing; heating, ventilation and air conditioning; And other major repairs.

To make conversions more attractive, Hundt proposed creating a tax credit for developers that would kick in when the units are occupied. The faster this happens, the greater the merit.

“Let’s not allow people to rebuild just for luxury housing and then wait a long time for a tenant,” he said. “Let’s monetize the tax break when a person moves in. So they will set prices in the market.”

Each of these solutions has potential drawbacks. Tax breaks and incentives cost money. Lower tariffs on Canadian timber could hurt American producers. Releasing more housing for homeownership could deprive people of much-needed rental housing. But all the experts agreed: there is no single solution to the housing shortage. All corrections will be required.