U.S. lawmakers have launched an effort to encourage development of affordable housing units and the removal of barriers to homebuilding.
The Congressional Yes In My Back Yard Caucus is designed to promote more construction in hopes of easing a housing shortage that market professionals call a contributing factor to high home prices.
“This is a long-term, structural problem requiring us to take bold steps to create the new homes our community needs," U.S. Rep. Robert Garcia, a California Democrat who is one of the caucus co-chairs, said in a statement. "Embracing YIMBYism, building more housing units and embracing mixed-use zoning will increase our housing supply and drive down costs for Americans."
Garcia also called for financial incentives to states and local governments that approve new construction.
Grassroots efforts by homeowners to oppose development in their neighborhoods, referred to as the not in my backyard — or NIMBY — movement, are often successful because city council members want to please their constituents and get re-elected, according to Ken Johnson, an economist at the University of Mississippi. Municipalities counter by saying they have the difficult task of balancing the need for growth with residents' wishes for quality of life.
In recent years, escalating prices of new and existing homes, along with mortgage rates above or near 7%, have hampered housing affordability, making it increasingly difficult for first-time buyers to jump into the real estate market. The 30-year, fixed-rate mortgage averaged 6.81% as of last Wednesday, down from 6.84% last week, according to mortgage company Freddie Mac. A year ago at this time, the rates averaged 7.22%.
From the Homes.com blog: Old House vs New House: Is it Better to Buy New Construction?
The National Association of Home Builders and other industry groups regularly cite a shortage of homes as an important reason why U.S. housing affordability is so challenged. Estimates of the current U.S. housing deficit range from 2 million to as many as 7 million units.
Great Recession disrupted demand
Some home lot prices and construction costs have increased to the point where companies can't build relatively inexpensive starter homes, analysts say. What's more, there was so little demand for homes during the Great Recession of 2007 to 2009 that land developers drastically cut back on lot preparation.
In November, Ryan Marshall, CEO of homebuilding giant PulteGroup, said municipalities and residents must be more accepting of development.
"We are a not-in-my-backyard population, and so everybody loves the idea of growing the economy, growing more jobs, until it relates to putting new development next door to you or across the street from where you currently live," Marshall said on a webcast with Willy Walker, chairman and CEO of the Walker & Dunlop real estate finance services brokerage. "And then all of a sudden, we become anti-growth. Until we figure out how to solve that as a country, we're going to continually and perpetually have a chronic undersupply of housing."
Combatting NIMBYism was also a topic during a panel discussion at the National Association of Realtors’ largest annual meeting in Boston. While real estate leaders presented various ideas for easing the housing shortage, most of them included one strategy in their proposals: community engagement to combat NIMBYism.
“Every town is sure that theirs is the best place to live, and it’s special and unique, and it needs to be preserved as such,” Kathleen Heyer, an associate at the Pierce Atwood law firm, said during the November conference. “The bogeyman of more housing, it triggers something so passionate in people.”
In a statement, NAHB Chairman Carl Harris said it's imperative "to address impediments to increasing the nation’s housing supply and provide more affordable homeownership and rental housing opportunities for all Americans.”