Home affordability is at a major low, making home ownership out of reach for many Americans. Danielle Hale, chief economist at Realtor.com, joined TheStreet to discuss the key changes needed for affordability to improve.
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Full Video Transcript Below:
CONWAY GITTENS: And so what has to happen for homes to become more affordable beyond just the baby step, and do you see this happening any time soon?
DANIELLE HALE: Yeah, in order to really improve housing affordability, we need to add more housing capacity. So we need to see more for sale and more for rent homes that are built. It generally be single family and multi-family homes. Builders have been making progress. They've been building at the upper end of their historical ranges. But we had a really big hole to dig out of. Estimates from Realtor.com suggest that it was somewhere between 2 and 7 million homes that we were lacking over the last decade. We build about 1 to 1.5 million homes each year. So we've got a multi-year problem to build out of and think it's just going to take some time. Fortunately, everyone seems to be aware of the problem and agree on its existence. It's just a question of how do we take steps to encourage builders to build more and to make it easier for builders to build more effectively to solve this problem.
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CONWAY GITTENS: And so how much of the problem is a private sector issue versus a public sector issue? And by that I mean private sector being the builders, but the builders need land that is public.
DANIELLE HALE: Yeah so there are ways that policy, not necessarily Washington and federal policy, but it's often local land policy can either help or hinder builders ability to meet this demand. So zoning has been a hot topic lately and up zoning or increasing the density that is available or permissible in different areas is something that can help. It is a case that if you were to replace a single family home with townhomes or a duplex, that does create more housing in the same sort of space without having to create more land or sprawl out into further areas and suburbs and exurbs. And so I think localities that are thinking about this and making changes to permit higher density zoning are going to see the benefits. They're not going to come immediately or overnight, but they are going to see the benefits over time. And we have seen a lot of changes at the state level. California has been an innovator and at the city level or metro level, Saint Paul and Minneapolis have also been leaders when it comes to densifying, the existing land use. And so I think we're likely to see those policies pay dividends over time.
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