T
he US housing market is facing a significant shortage, and policymakers must work with communities, states, and the mortgage industry to increase development and access to loans. A recent panel discussion at NAR's legislative meetings highlighted the need for deregulation to spur development.
Key takeaways from the session include:
* Community involvement is crucial when considering zoning or regulatory changes to encourage residential development.
* States can play a key role in creating reasonable policies that promote housing supply and affordability.
* The mortgage industry may also need to rethink its rules to increase homeownership, particularly for lower-income buyers.
Relaxing mortgage rules could help more people qualify for loans without risking a subprime lending crisis. This approach would give builders an incentive to serve lower-income buyers and increase the overall housing supply.
States have been successful in implementing policies that promote housing development, such as legalizing accessory dwelling units and streamlining manufactured housing regulations. For example, Montana has followed other states by allowing multifamily homes in commercial zones and simplifying rules on manufactured housing.
The mortgage industry's rules may also need to be reformed to increase homeownership. Since the 2008 financial crisis, fewer people with credit scores below 740 have been able to buy homes due to tightened regulations. This has resulted in a decrease in housing supply, as developers can no longer build for this population.
A recent update to VA loan rules appears to be working well, allowing military borrowers to use their home loans to pay their agents without penalty. The revision was made in June 2024 and has not discouraged veterans from using their home loans.
