Texas builders are in the best housing market in the country, and while it’s far from perfect, other states have it a lot worse, Leading Builders of America vice president Phil Crone told a crowd at Dallas Builders Association’s State of the Industry event on Thursday.
Crone, who previously served as executive officer of the Dallas BA, joined National Association of Home Builders president and CEO James Tobin for a discussion on how federal regulations are impacting home building and development.
The Federal Reserve pushed to drop inflation to 2 percent about a year ago and warned home builders that it was going to hurt, Crone said.
“They thought that with the inflationary attack, they were going to break the consumer,” he said. “What happened was they broke the transaction. When you think about it, prices are still high. Supply is as low as it’s ever been. It’s rough out there.”
Everything is Better in Texas
There’s no doubt that demand exists, so a suitable solution, Crone said, is to provide more supply.
“We can fix it by building more homes,” he said. “That’s what we do. That’s what needs to happen. It’s easier said than done.”
The U.S. is short about 4 million homes, he added. The National Association of Realtors reports that the country is experiencing the lowest supply of single-family homes since 1982 when the NAR began tracking such data.
“You should be able to build your way out of it, but it’s not easy,” he said.
Americans need an annual income of about $115,000 per year to afford a median-priced home, which is about $40,000 more than a typical household earns, Crone said.
Crone explained that some of the greatest challenges exist for home builders in California where wildfires are rampant; in Nevada, where illegal practices were commonplace for decades; and in Arizona, where water resources are scarce.
Climate-related legislation has been aggressive out of Washington, D.C., without much consideration given to the impact on housing affordability, Crone explained.
“The takeaway here is you’re still, for a lot of reasons, in the best market in the country and in as good of a situation as you could possibly have,” he said. “There’s plenty of things to be worried about and plenty of things to complain about … It’s all relative. You’ve got to realize, that like a lot of things in life, other people have it worse and in the housing industry, just about everybody else does in terms of the challenges we’re dealing with.”
National Association of Home Builders
Tobin, a “recovering lobbyist” whose office with NAHB is based in the nation’s capital, said a tough conversation is taking place at the national level about how to solve the housing crisis.
“We’re all trying to build the American dream as affordably and attainably as possible,” he said.
The average regulatory burden is over 25 percent for a newly constructed single-family home and over 42 percent for multifamily development.
“I’ve never met a legislator who is anti-housing, but they really put some barriers up toward achieving that goal,” Tobin said. “They care about housing. They are trying to find a way to make housing more affordable, but they are trying to solve the problem from the demand side. They want to help people afford an already-expensive product because they don’t want to lower the price.”
If more supply is added to the market, prices will be lowered organically, Tobin explained.
“We’re looking for the government to step back and let us do our jobs, which means if you turn the power in this room loose, we will meet the demand in this country for housing in America, plain and simple,” he said. “We are creating a society where only the wealthy can afford to be landowners in America. We can no longer do that. We’ve got to decide if we want to house everybody or if we just want to house the wealthy. The way we do that is with more supply.”
