1. Housing as an Economic Driver The Potential for Home Building Growth
BIA - Hawaii
November 15, 2016
Robert Dietz, Ph.D.
NAHB Chief Economist

2. Rising Population Entering Housing Demand Years
Millions
Headship rates increase from 15% to 45%
Born 1980 or later
Born
Born
Born 1947 or earlier
Source: U.S. Census Bureau, 2015 National Population Estimates.

3. Household Formation Average yearly growth of household formations has doubled
Thousands
Avg: 1.4 million
(12% renters)
Avg: 1.0 million
(105% renters)
Avg: 0.5 million
(130% renters )

4. GDP Growth 2016 weakest year of the expansion
Annual Growth
LT avg (‘58-’07) % % %
2016f %
2017f %
2018f %

5. US Payroll Employment Total jobs above the trend
Millions
0.1%

6. Target Federal Funds Rate Gradual increases ahead

7. Mortgage Rates Expected to rise

8. Low Housing Inventory Existing home inventory flat
246K as of March for new homes

9. Constraints on Building Growth
The Three L’s

10. Labor Unfilled construction jobs rising

11. Lots Housing Starts (Area) and Low/Very Low Lot Supply (bars)

12. Lending - AD&C Access Better Worse
Source: Senior Loan Officer Opinion Survey (SLOOS), The Federal Reserve Board.

13. Regulatory burdens are rising for home builders. Up 29
Regulatory burdens are rising for home builders Up 29.8% over the last 5 years Building codes Environmental Labor Zoning NAHB research finds that 24% final cost of a home due to direct and indirect regulatory costs 3/5 of that total is associated with land use

14. Home Prices of New and Existing Homes Prices began to diverge in 2008, gap widened more post 2012
Difference
: $21,800
Since 2009: $63,600
Since 2012: $72,200
Update New homes median sales price

15. Home Size Market Shift – Over?

16. Home Building – Economic Growth Potential

17. Residential Fixed Investment Housing is a bright spot
Update after Friday

18. Local Solutions Must Lead
What Can Be Done to Promote Growth?
Local Solutions Must Lead

19. Many examples of what NOT to do Boston
Many examples of what NOT to do Boston 24 to 35 year olds are leaving due to high housing costs California Need for affordable housing reaches down to 120% of AMI

20. Successful strategies Land-use strategies. Efficient zoning (e. g
Successful strategies Land-use strategies Efficient zoning (e.g. allow smaller lots) Make land available for affordable housing (permit accessory dwelling units) Provide regulatory relief Example: Nashville, TN – Urban Zoning Overlay Districts Floor area bonuses for mixed-used buildings with at least 25% space for residential use

21. Successful strategies Financial strategies
Successful strategies Financial strategies Property tax or tax credit relief Provide financing from other sources (sales taxes) Reduce/eliminate impact fees Example: Grand Forks, ND affordable housing district Concessions on tax assessments and land standards Developers construct higher density, smaller entry-level homes

22. Successful strategies Other strategies
Successful strategies Other strategies Policies that encourage housing development Redrafting of Washington DC zoning ordinance (just published) Lessen need for variances/special approvals – saving time and money Made accessory dwelling units easier to be approved e.g. narrowed required width of alleyways

23. Successful strategies Other strategies
Successful strategies Other strategies Policies that encourage housing development Redrafting of Washington DC zoning ordinance (just published) Parking minimums decreases or eliminated in some parts of DC More allowance of retail (small shops) in residential zones

24. Successful strategies Other strategies
Successful strategies Other strategies Policies that encourage housing development Promote pocket communities and urban villages Smaller homes, transit access, walkable, infill

25. eyeonhousing.org housingeconomics.com @dietz_econ
Thank you Questions?
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@dietz_econ