The (Broken) State Of The U.S. Housing Market
AUDIE CORNISH, HOST:
The U.S. housing market is out of whack. Prices are soaring, and demand is strong. And that might sound great if you're a homeowner, but for buyers, it's rough. There's a record lack of homes for sale and they're selling in record time, all of which is making it very hard for anybody looking to buy a home, especially for the first time. NPR's Chris Arnold covers the housing market. He joins us now.
Welcome back, Chris.
CHRIS ARNOLD, BYLINE: Thanks, Audie.
CORNISH: All right. So just how bad is it for home buyers?
ARNOLD: It's pretty intense right now, especially in areas where there's been job growth and a lot of people want to move there and live. I talked to Jeff Keese. His family lives in Texas right now. He just finished graduate school and got an education degree. And he's got a new job in Atlanta, so his wife and the three kids and he, they're all moving. They got to move pretty quick, and they're looking to buy a house for $250,000 around there.
JEFF KEESE: My wife and I actually flew out to Atlanta and looked at some homes in person this past week. We were both vaccinated. One of the homes we looked at, the day it listed, they had 40 offers, and some of those were made before it even listed. So it's very nerve-wracking for us as buyers, especially several states away.
ARNOLD: I mean, 40 offers. And they keep bidding well above asking, and they're still not getting the house. So, you know, it's a frenzy out there.
CORNISH: But what about the pandemic? I mean, we were hearing about a precipice of evictions. Help us understand what part of the economy we're looking at.
ARNOLD: Well, I mean, all that is still true, right? There are 9.5 million people who can't pay their rent. But there is a much larger part of the economy where people have been working, and a lot have been saving more than they ever have before. And there's a lot of people looking to buy houses, and there are just not enough homes for sale. That's also a huge part of this. And some of that, too, is related to the pandemic. People hunkering down. It's COVID. They're scared. They're not - maybe they would have sold, but it's too much this year. A big issue, too, is as a country, we just have not been building enough new homes.
CORNISH: Why? I mean, if we've got this surge in demand and high prices, why wouldn't there be more homes being built?
ARNOLD: Good question. And so I talked to a guy who should know the answer - the chief economist for the National Association of Home Builders, Robert Dietz. And here's what he says.
ROBERT DIETZ: We have a deficit of probably about a million single-family homes nationwide. It's a consequence due to the fact that coming in the years after the Great Recession, we have under built. And I've sort of cited it to some underlying causes that we've called the five L's.
ARNOLD: So obviously, Audie, it's all about the five L's.
CORNISH: Location, location, more locations?
ARNOLD: Different Ls.
CORNISH: Oh, OK.
ARNOLD: These are totally different L's.
CORNISH: Go on.
ARNOLD: Hey, I'm going to tell you the L's - labor, lots - that's land - lending, lumber and laws - like zoning laws. Which do you want to hear first?
CORNISH: Can we talk about labor first?
ARNOLD: Yes. Labor, there's a good one. A lot of construction workers left the industry after the housing crash, so it's really hard to find workers to build houses. Land has been expensive. That's an obstacle. Lending - for the companies that build homes, they've been having some trouble getting loans. Lumber is interesting, too. I mean, the prices are through the roof. Like, two-by-fours and stuff have doubled in price, adding like $25,000 to the cost of a house, so that's a problem. The biggest thing, though, is really zoning laws, and that's plagued us for a long time. There's just so many rules that get in the way of building homes.
CORNISH: You mean NIMBY - kind of not in my backyard type thing or?
ARNOLD: Right, exactly. And Dietz says if there's one thing that we could do to really improve the lives of Americans looking to become homeowners, it's allow for zoning where you can build smaller homes that are closer together so people can afford them. And, you know, four very boring words that have tremendous power in America are minimum lot size zoning. You know, and what that means is if you require one acre of land to put one house on, it's going to cost a million dollars. You know, let people build smaller stuff that people can afford.
CORNISH: That's NPR's Chris Arnold. Thanks for teasing this apart for us.
ARNOLD: Thanks, Audie.
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