Housing costs are increasing as the shortage of new homes continues. The reasons? Material & labor costs; government regulations? We’ve heard this before. Is there anything new?
Portland Tribune
Forecast: Pressures growing on housing market
The annual Housing Forecast hosted by the Home Builders Association of Metropolitan Portland resumed Tuesday.
Jim Redden, November 10, 2021
Excerpts:
Housing costs are going to continue increasing for reasons outside the control of residential home builders.
These reasons include a continuing shortage of new homes to meet the demand, an ongoing labor shortage that is driving up constructions wages, disruptions in the supply chain increasing the cost of materials, the highest inflation in more than 30 years, and expected increases in interest rates as the federal government winds down its COVID-19 pandemic economic stimulus programs.
Those were among the options of two economists who spoke at the 2022 Housing Forecast hosted by the Home Builders Association of Metropolitan Portland on Wednesday. They were Oregon State Economist Josh Lehner and Robert Dietz, chief economist and senior vice president for Economics and Housing Policy for National Association of Home Builders.
“Rents are going up, and rents support higher home prices,” Lehner said about the ongoing housing supply shortage.
The presentations from the forecast can be found at here.
Comment:
It’s not surprising the HBA is going after the softer political pressure points as solutions to enhance their business prospects: relaxing government regulations and expanding urbanization into greenfield zones. Lobbying may pay off more readily, as there is not much that can be done by builders to lower labor and materials costs. Creating over 29,000 addition housing units a year through 2040 is a tall order, but there is another path to the desired outcome if you recognize that land values are rising faster than building values. A land value tax would place downward pressure on land prices of vacant & underutilized lots, especially in central city areas where location values are high.
Home builders, regardless of their costs – labor, materials, regulations, and fees – will sell their products at the highest price the market will bear. Building single family homes in exurbia is not going to provide the volume and affordability that meets the current demand market. Moreover, contributing to urban sprawl is a land and energy-intensive development pattern that molds car-centric lifestyles. Oregon’s and Washington’s urban growth management policies encourage densification, walkability and transit-oriented development to improve affordability and sustainability.
Tom Gihring, Research Director
Common Ground OR-WA
