Housing is 'unattainable' for too many Americans: Fed’s Barkin
Richmond Fed President Tom Barkin said Wednesday that homeownership is becoming "unattainable" for too many workers and the key is to juice more supply of homes on the market.
"The math all too often just doesn’t work," Barkin said in a speech at the Virginia Governor’s Housing Conference in Hampton, Va.
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To improve the math, he said, housing supply needs to increase. But how? Barkin offered up a litany of ideas for states and localities, including issuing more permits for private single-family homes, reducing unnecessary regulation, and lobbying those who don’t want their towns or communities to change.
He also cited some examples of changes in certain parts of the US designed to welcome more housing and boost supply. One government body in Virginia —Wise County — implemented a tax incentive for renovation, rehabilitation, or replacement of residential and commercial properties.
In West Virginia, he said, a newly created Build WV program offers a tax exemption for purchasing construction materials, a 10-year property value tax credit, and the potential for a business and occupation tax exemption.
Barkin’s comments come as mortgages hover a near multi-decade high of nearly 8%, following an aggressive campaign over the past year and a half to fight inflation by boosting interest rates.
These higher rates are contributing to the affordability problem and also indirectly contributing to the supply issue by discouraging homeowners who locked in lower rates from selling.
The lack of supply is also rooted in the last housing crisis of 2008, which discouraged builders from taking chances on new development in the debacle's aftermath.
Barkin said another key question in the quest for more housing supply is what communities are doing to make affordable land more available. Barkin says rezoning is needed to unlock land. He also said states should pitch the conversion of industrial sites into homes for residential home developers.
"The key is more supply," said Barkin. "To create that supply, communities need to own the problem, compete for developers, innovate in offering affordable land and lowering costs, and engage with nontraditional partners."
Homeownership "is becoming increasingly unattainable for too many workers."
