Podcast Summary
Housing affordability crisis causes: The housing affordability crisis is a result of the financial crisis in 2008, lack of residential construction workforce, insufficient housing supply, supply chain disruptions, and rising mortgage rates, impacting both lower-income and middle-income Americans.
Housing affordability is at a 40-year low and is a pressing issue for investors and homeowners alike. The root causes of this issue can be traced back to the financial crisis in 2008, which led to a lack of residential construction workforce and insufficient housing supply. More recently, supply chain disruptions caused by the COVID-19 pandemic and rising mortgage rates have exacerbated the problem. Both political candidates have acknowledged this issue, and it's impacting not just lower-income Americans but also middle-income Americans in cities across the country. The solutions to this issue often involve government policies, and during this episode of the BiggerPockets Real Estate Podcast, they discussed potential policies and their effectiveness with Dennis Shea, the Executive Director of the Center for Housing Policy at the Bipartisan Policy Center.
Housing affordability crisis: Regulatory and land use reforms, such as reducing parking requirements and streamlining permitting processes, along with subsidies for affordable housing, are crucial to address the housing affordability crisis caused by a housing supply shortage.
Home affordability is at a 40-year low due to a housing supply shortage, particularly for affordable options. This issue is exacerbated by regulatory and land use policies that make it difficult and expensive to build new housing, especially multifamily units. To address this, regulatory and land use reforms, such as reducing parking requirements and streamlining permitting processes, are essential. Additionally, subsidies for building affordable housing for lower-income families are necessary for the development to be financially viable. Overall, a combination of regulatory and land use reforms, as well as subsidies, could help alleviate the current housing affordability crisis.
Real Estate Investment Opportunities: Real Estate investment opportunities include passive options with reliable returns through companies like Renting Retirement and PPR Capital Management, new lending approaches focusing on income potential, and proposed Biden administration policies to increase housing supply and affordability.
There are various investment opportunities for those interested in real estate but lack the time or resources for management. Companies like Renting Retirement and PPR Capital Management offer passive investment options with reliable returns and professional handling of property-related matters. Additionally, new lending approaches, such as Host Financial, cater to investors with a focus on income potential rather than personal income statements. The Biden administration, through Vice President Harris, has proposed policies addressing affordability through the construction of new homes, expansion of tax credits, and incentives for private investment in starter homes. These proposals aim to increase the housing supply and alleviate some affordability issues.
Housing affordability: Lack of bipartisan support in Congress hinders the implementation of policies to increase housing supply and affordability, potentially leading to higher home prices in the long run.
Increasing demand for housing without adding sufficient supply can lead to higher home prices in the long run. The discussion focused on various housing policies, including the expansion of the Low-Income Housing Tax Credit and the proposed construction of three million homes through public-private partnerships. However, without bipartisan support in Congress, these proposals may not come to fruition. Regarding rent control, a temporary cap on rent increases for large landlords was proposed by President Biden, but it lacks Republican support and could potentially disincentivize developers from building new rental properties. Overall, durable and long-term solutions for housing affordability require both increasing supply and bipartisan support.
Rent Control Effectiveness: Rent control, despite its political appeal, discourages new rental unit production and worsens the affordable housing deficit. Effective solutions include incentives for new rental construction.
Rent control, despite being a politically appealing solution to address rising rents, is generally considered ineffective by economists from both sides of the spectrum. This is because imposing price caps on rental housing can discourage the construction and production of new rental units, exacerbating the existing deficit of affordable housing. While the message of rent control may resonate with voters, particularly those facing rent increases, a more effective long-term solution would be to focus on increasing the supply of rental housing. Economists argue that this can be achieved through policies that incentivize the building of new rental units, such as tax incentives or deregulation. Ultimately, while rent control may provide temporary relief for some renters, it is not a sustainable solution to the larger issue of housing affordability.
Landlord investments security: Two companies, Steadily Insurance and SimpliSafe, help secure landlord investments with tailored insurance and top-rated home security, while the Republican Party focuses on improving housing affordability through reducing mortgage rates and opening up federal land for new construction.
Securing your investments as a landlord is crucial, and two companies, Steadily Insurance and SimpliSafe, can help provide peace of mind. Steadily Insurance offers tailored landlord insurance quotes and comparisons, while SimpliSafe provides top-rated home security with no long-term contracts and affordable pricing. The Republican Party platform focuses on improving housing affordability through reducing mortgage rates and potentially opening up federal land for new construction. The expansion of the low-income housing credit also has bipartisan support, but it hasn't passed yet due to the complexity of larger legislative packages. Overall, taking care of your investments through proper insurance and smart housing policies can lead to better financial security and peace of mind.
Housing Tax Credit Expansion: The housing tax credit expansion, aimed at increasing affordability, failed to pass in Congress due to controversial tax bundling, but is expected to be a focus in the coming year as most housing tax provisions expire. A more affordable housing market could lead to a healthier housing market, benefiting both investors and homeowners, and contribute to positive economic growth.
The expansion of the low income housing tax credit, which has broad support, was unable to pass in the current Congress due to it being bundled with other controversial taxes. However, this issue is expected to be a significant focus in the coming year as most housing tax provisions from the 2017 tax law are set to expire. Regarding the impact on current homeowners, increasing affordability through more supply in the market could lead to a healthier housing market, closer to historical averages of appreciation, benefiting both real estate investors and homeowners alike. It's important to note that a more affordable housing market was also conducive to a profitable real estate investing business in the past. Overall, efforts to improve housing affordability could lead to positive economic growth and labor mobility.
Real Estate Investment Risks: Real estate investment involves risks, past performance doesn't guarantee future results, consult advisors, and only invest disposable income
Investing in real estate, as discussed in this podcast, comes with risks and it's essential to make informed decisions. All opinions shared are those of the hosts and participants, and past performance does not guarantee future results. It's crucial to consult with qualified advisors and only invest capital that you can afford to lose. BiggerPockets LLC disclaims any liability for damages arising from the use of information presented in the podcast. In essence, real estate investment requires careful consideration and a solid understanding of the risks involved.