Event Coverage: Searching for answers on the lack of affordable housing supply
The lack of affordable housing supply is reaching crisis-level nationwide, said Brian Brooks during his opening remarks at a recent symposium on affordable housing held in Los Angeles. (View panels)
Brooks, Fannie Mae’s Executive Vice President, General Counsel and Corporate Secretary, noted a “perfect storm” is developing, where demand by Millennials looking for homes will spike at the very time that new supply is at the lowest since World War II. “[We] thought there’d be no better thing to do this year than to use our convening power to shine a spotlight on this issue, which I would argue is the most important challenge facing our country,” Brooks said.
More than 150 lawmakers, academics, and housing industry experts gathered at the event to discuss Los Angeles’s difficult, and growing, housing supply crisis. Co-sponsors included the California Association of Realtors®, the California Mortgage Bankers Association, the California Bankers Association, the California Housing Finance Agency, and the Building Industry Association of Southern California.
Defining the Squeeze
Panelist Kathryn Barger, Los Angeles County Supervisor in the Fifth district, which is home to more than 2 million Angelinos, said, “The costs of creating new housing, whether it’s an apartment building or a single family home, are so high that builders can’t make decent middle class, workforce housing work — at any price.”
Barger pointed to regulatory, permitting, growth management, and land use restrictions as a very big driver of costs, which have further tamped down supply.
Leslie Appleton-Young, Senior Vice President and Chief Economist for the California Association of Realtors, says the American Community Survey Data shows that working class, younger people are not able to make ends meet in California, and their exodus to other states is accelerating. “We are going to see our economic edge dulled by the inability to house workers,” she added.
“In 2012, the outflow was a little above 36,000,” Appleton-Young told attendees, “For the past two years, it has been at 100,000.”
Panelist Jonathan Lawless, SVP for Product Development and Affordable Housing at Fannie Mae said, “We don’t think there’s a demand problem; people want homes. And we don’t think that access to credit right now is the constraining factor. At the end of the day, it boils down to this inventory challenge nationally,” he added.
It’s not just that we need more supply, it’s that we need more supply in the right places,” added panelist Ben Metcalf the director of the California Department of Housing and Community Development.
Stuart Gabriel, Director of the UCLA Ziman Center for Real Estate, suggested during his panel that innovation around transportation could increase supply, pointing to the expected advent of driverless cars in 10 years.
“Autonomous vehicles will strongly reduce the demand for parking and parking structures in our metropolitan areas,” Gabriel said. “That’s going to create an opportunity for recycling of that land, reuse of that land and the availability of that land for housing development.”
Other innovations mentioned included Accessory Dwelling Units (ADUs), otherwise known as backyard “granny flats.” Amanda Daflos, the leader of Los Angeles Mayor Eric Garcetti’s Innovation and Transformation Office, spoke about their multi-year effort at the statehouse to legalize the construction of ADUs. Since they’ve succeeded, the permitting requests in Los Angeles have shot up by 1,000 percent, said Daflos.
As panelist Tom De Simone of Genesis LA pointed out, “We think that there is a big market out there for the mortgage industry to step into this, because not only are you financing the $150,000 ADU, you’re taking out the four, five, six hundred thousand dollar first on this property, so there’s a big kind of refinance play for the mortgage lenders who are interested in the space.”
The UCLA symposium is the first of a series of conversations around the country that Fannie Mae will convene in 2018. The goal is to work with industry partners and housing leaders to drive solutions to the affordable housing crisis.