Financial news outlets are telling us that there is a shortage of new housing. But we don’t really need to see it in the news to know that the housing shortage in our communities is real. That’s because wherever we fall on the homeownership spectrum – young or old; newbie or longtime veteran homeowner – moderately priced housing and entry-level housing is visibly in scarce supply.
Just as we did when we explored the challenges surrounding millennials and homeownership, the lack of supply of new housing in entry-level markets is a topic worthy of conversation. The fact that builders are building a greater amount of move-up or luxury homes than in the entry-level market speaks to one of the reasons that younger, newer homebuyers are finding it difficult to launch into homeownership.
According to the US Census Bureau homeownership release, the second quarter 2018 homeownership rate was lowest for the age group under 35 years old (36.5 percent). While this improved in the second half of the year, we need to do better.
Let’s face it -- a thriving, robust housing market requires a steady influx of new and ongoing activity. It’s good for everyone as it helps to grow wealth and stability. New homebuyers coming into the game make it possible for current homeowners to move out and move up the ladder. And so begins the climb, a revolving cycle that brings homeowners closer and closer to personal wealth. So, the shortage of entry-level housing can present complex challenges, particularly when so many potential homebuyers are excluded from the market.
What are some solutions? Bringing down costs would be a great start. This can be achieved with innovative approaches that bring homebuilders and community stakeholders together for the purpose of leveraging collaboration towards entry-level housing.
Local governments, in partnership with homebuilders and a variety of state and federal agencies, have an important role to play. Offering communities the infrastructure and support to develop grant, loan and incentive programs can be begin the process that helps millennials achieve homeownership.
Business owners, real estate developers and investors, and forward-thinking economic development agencies can be vital partners in the effort to create attainable housing. Strategizing ways to increase local commerce, job prospects and vibrant small business opportunities is just a start.
The financial community needs to get involved, too. While there has been some improvement in loan programs for entry-level and first-time buyers, more effort needs to be centered on helping this new generation with qualification, down payments and planning.
Finally, let’s not forget about the residents. Public engagement allows for the kind of conversation that brings about solutions to public and social challenges. Hearing from the residents about their needs and ideas for change will go a long way to building and offering entry-level housing.
Collaboration is key. By partnering together, we can provide a variety of alternate ways forward.