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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 32 April 2024 C O V E R S T O R Y shop for, tend to be fixed charges, they disproportionately affect low-to-moder- ate income and first-time homebuyers," Carroll added. "The biggest roadblock standing in the way of the Biden administration's plans is Congress," LendingTree's Channel said. "To say that our current Congress is dys- functional is like saying that the ocean has at least a gallon of water in it. It's techni- cally true, but massively understates how difficult it will be for the Biden administra- tion to get many of its proposals enacted into law." He remains skeptical that many of these proposals will get much traction so long as Congress remains so intensely divided along party lines. Carroll noted that efforts to bring relief to the housing market needed to address both supply and demand angles. "If the administration and Congress can pass legislation that significantly stimulates production of new single-fam- ily units, particularly at lower-priced tiers, we will see more renters convert into buyers. We also expect that many otherwise mortgage-ready renters will be down payment-burdened, making down payment assistance and closing cost reductions important components to converting renters to sustainable home- owners," Carroll explained. Channel told MortgagePoint that any large-scale changes in the housing market will more likely be a victory by inches, with progress made and then lost as both parties try to solve the same problems, but with very different views of how to find resolutions. Nor is partisan politics the only issue standing in the way of gaining momentum in solving the problems that continue to plague the housing market. "Construction doesn't happen overnight, and even with backing from the federal government, homebuilding is likely to face plenty of pushback from current homeowners who want to keep the values of their properties high," Channel said. "Overly strict zoning laws that exist at the local level are a big reason why the U.S. doesn't have enough homes to keep up with buyer demand, and, owing to that, action from the federal government isn't enough to fix ev- erything wrong with the nation's housing market. We've got to advocate for change from the bottom as well as the top." Carroll echoed Channels's com- ments, reminding that this is a long game, not a short one. "The challenge with creating new homeowners is the dearth of single-fam- ily homes available for sale. The reality is that it's hard for home builders to develop or renovate single-family homes for low-, moderate-, and middle-income families at price points that are afford- able, marketable, and adequately prof- itable," Carroll said. "However, there are practical policy interventions that have proven to help home builders and their investors crack this code while ensuring that the benefits of taxpayer investments exceed the costs. Various elements of the Biden administration proposal cover many of these policies directly via tax credits for home builders and their inves- tors or indirectly via subsidies to munic- ipalities that implement reforms such as less restrictive zoning regulations." Pinto is a strong and outspoken proponent of zoning reform as a solution to the inventory shortages—in particular, revising zoning at local levels to allow for more alternatives to single-family stand- alone homes, such as duplexes, "granny flats," and other multifamily options. "If you constrain the number of units that can get built through zoning and land use requirements," Pinto said, "you can't possibly generate the number of units needed to equal the additional jobs and households that you're adding. It's as simple as that." Pinto cites studies where zoning revi- sions have shown good results in markets such as Seattle, Philadelphia, and Houston. "You can add a tremendous amount of housing by replacing one unit with two," Pinto said. "And it would be done by the private sector, without any subsidies. Just let the market do what the market does best, which is figure out the highest and best use of a valuable asset— in this case, a lot." As Pinto summarized in his op-ed, "The solution is for states and localities to free the market from unduly restrictive zoning and land use restrictions that con- strain supply and drive up home prices. If more states implement light-touch density, which moderately increases density and makes such development by right, they will unleash a swarm of natu- rally affordable small-scale development. Spotser acknowledges that Biden's proposals will inherently incur a cost, but she argues that some things that require money are nevertheless worth it in the big picture. "The thing I would say to critics is to remind them that housing is about 30% of the GDP in the United States. And if the housing market is not functioning, you are talking about something that is 30% of the GDP of the United States not being able to be efficient or functioning. If you don't get homeowners into that market, the ancil- lary effects on the nation's economy are significant. Homeownership is not just about the person who buys the house; it's also about the companies that service the house. It's also all the products, it's Lowes, it's Home Depot, it's all those other things that make up this ecosystem of homeownership in the United States." "If we do not have a healthy housing market," she added, "we do not have a healthy economy."