How $5 Billion White House Housing Plan Will Affect Real Estate
Q: Gerald, I’ve heard you talk about the importance of home zoning reform before. What do you think about the White House’s $5 billion housing proposal? Annabella, Union City, NJ
A: There is certainly a big residential housing shortage in the US right now. The number of homes for sale now is less than half the number of homes available for sale 15 years ago. The White House is mulling a $5 Billion plan to ease the national housing shortage by pushing local governments to allow apartment buildings in neighborhoods that are currently restricted to single-family homes. The proposal provides financial incentives to local governments that change zoning laws restricting many neighborhoods to single-family homes.
Zoning laws were rare in the United States until about 100 years ago when local governments began to adopt rules that set minimum lot sizes and barred apartment buildings from many neighborhoods.
Older and more affluent homeowners may resist changing long standing zoning ordinances but Millennial buyers, who are now the dominant buying group in many local real estate markets are more likely to back the changes as they will benefit the most from them.
Some cities like Minneapolis have allowed small apartments to be built in residential areas across the city, and Oregon made a similar change for all urban areas. California last year allowed smaller living spaces to be built next to single-family homes.
The proposal is more incentive based rather than punitive. The proposal would set up a $5 billion fund for local governments to compete for grants to pay for new schools, roads or bridges if they agreed to loosen zoning rules.
In addition to allowing for more dense home unit building, I think zoning regulations should also be relaxed to allow for vacant commercial spaces to be converted to much needed residential housing. Local zoning ordinances in the US are often archaic and arbitrary and many of these ordinances have existed for well over a half century. Zoning ordinances should reflect where society and housing demand is now, not where it was 50 or 75 years ago. Thanks for your question, Annabella. Good luck.
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