What needs to happen for homes to become more affordable

Danielle Hale, Chief Economist at Realtor.com, joins TheStreet to discuss what has to happen for home prices to come down

Transcript

00:00And so what has to happen for homes to become more affordable beyond just a baby step?

00:05And do you see this happening anytime soon?

00:08Yeah, in order to really improve housing affordability, we need to add more housing capacity.

00:13So we need to see more for sale and more for rent homes that are built, so generally these

00:18single family and multifamily homes.

00:20Builders have been making progress.

00:22They've been building at the upper end of their historical ranges, but we had a really

00:26big poll to dig out of.

00:28Estimates from Realtor.com suggest that it was somewhere between 2 and 7 million homes

00:32that we were lacking over the last decade.

00:35We build about 1 to 1.5 million homes each year, so we've got a multi-year problem to

00:42build out of, and I think it's just going to take some time.

00:46Fortunately, everyone seems to be aware of the problem and agree on its existence.

00:51It's just a question of how do we take steps to encourage builders to build more and to

00:55make it easier for builders to build more effectively to solve this problem.

01:01And so how much of the problem is a private sector issue versus a public sector issue?

01:06And by that, I mean private sector being the builders, but the builders need land that

01:12is public.

01:13Yeah, so there are ways that policy, not necessarily Washington and federal policy, but it's often

01:21local land policy can either help or hinder builders' ability to meet this demand.

01:25So zoning has been a hot topic lately, and upzoning or increasing the density that is

01:34available or permissible in different areas is something that can help.

01:39It is the case that if you were to replace a single-family home with townhomes or a duplex

01:45that does create more housing in the same sort of space without having to create more

01:49land or sprawl out into further areas and suburbs and exurbs.

01:53And so I think localities that are thinking about this and making changes to permit higher

01:59density zoning are going to see the benefits.

02:03They're not going to come immediately or overnight, but they are going to see the benefits over

02:06time.

02:07And we have seen a lot of changes.

02:08At the state level, California has been an innovator, and at the city level or metro

02:13level, St. Paul and Minneapolis have also been leaders when it comes to densifying the

02:21existing land use.

02:23And so I think we're likely to see those policies pay dividends over time.