- Top Biden officials met with homebuilders and labor unions last week to discuss the housing shortage.
- Decades of underbuilding have caused home prices to rise, making homes unaffordable for many.
- The National Association of Home Builders said it was a good first step, but “we are not out of the woods yet.”
- See more stories on Insider’s business page.
The White House just made it official: there’s a problem in the housing sector. Maybe it’s even a crisis.
On Friday, Secretary of Commerce Gina Raimondo, Secretary of Housing and Urban Development Marcia Fudge, National Economic Council Director Brian Deese, and Council of Economic Advisers Chair Cecilia Rouse held a virtual event with leaders across the homebuilding industry to discuss the housing shortage and increased home prices. According to the White House, attendees included representatives from builders, lumber companies, loggers, labor unions, and more, to discuss “core challenges” across the housing supply chain.
“The first step is to really get everybody around the table and find out what’s happening, where is the system broken, and what can industry do better and differently,” Raimondo told Bloomberg in an interview before the meeting. “Some issues relate to logistics, so if there’s anything that the government can do to help with ports and other modes of transportation, we want to know about that.”
Rent prices soared 9.2% in the first half of this year and home prices are climbing at the fastest pace in three decades, Insider’s Ben Winck previously reported, and it comes down to significant underbuilding over the past decade.
According to the National Association of Realtors, while housing stock grew at an annual rate of 1.7% from 1968 to 2000, it grew by an annual rate of 1% over the past two decades, and just 0.7% over the past decade, resulting in an underbuilding gap of over 5.5 million units in the past 20 years.
This has caused an “ever-worsening affordability crisis” for housing, and in order to make up for the gap caused by underbuilding, building would need to accelerate to more than 2 million housing units per year, which would mark a near 60% increase.
Following the meeting, the National Association of Home Builders wrote in a blog post that while the White House meeting was a “step forward, we are not out of the woods yet.”
“Looking ahead, we will remain laser-focused on not only lowering lumber prices and increasing supply, but also keeping pressure on policymakers to improve supply chains for all building materials in order to protect housing affordability,” it wrote.
President Joe Biden’s initial infrastructure proposal including a $US213 ($AU289) billion investment to create and retrofit over 2 million affordable housing units, but in the bipartisan infrastructure agreement, that provision did not make the cut, so where affordable housing stands with regards to infrastructure is uncertain.