Emerson Claus has been building homes for 45 years. But he never faced any delays as he is now trying to get basic building materials. “I had a client ask me to add a door,” he says of a job site outside of Boston. “We just waited six months to get it.”
“It’s a door in a frame,” Claus said, exasperated. “It’s a little crazy.” He says devices can be even worse. “A dishwasher, if you can find the model you want right away, you could wait a year.”
According to one estimate, the United States is short of more than 3 million homes to meet the demand of potential buyers. Pandemic-related supply chain issues don’t help. They are adding tens of thousands of dollars to the typical home cost. But the roots of the problem go much further back – to the collapse of the housing bubble in 2008.
“What I call a bloodbath happened,” Claus said. This is the worst real estate crash since the Great Depression. Many home builders have gone out of business. Claus was building houses in Florida when the bottom collapsed.
“A lot of my trades people got other jobs, went to retrain for new jobs in law enforcement, all kinds of jobs,” says Claus. “So the workforce has been somewhat decimated.”
A few years later, as Americans started buying more homes again, construction remained below normal. And this construction slump continued for more than a decade. Meanwhile, the biggest generation, the millennials, have started to settle down and buy homes.
And that’s the main reason we’ve lost millions of homes — for many years, builders simply weren’t building enough to keep up with demand. This lack of supply has pushed house prices to record highs – up almost 20% last year alone.
Gradually, however, many residential construction companies recovered. Claus is now president of the Home Builders and Remodelers Association of Massachusetts. Before COVID hit, he again had a team of nine full-time workers. This is without taking into account the many electrician, roofer and plumber subcontractors with whom he works on the houses.
“We always need guys,” says René Landeverde, Claus’ foreman. He is originally from El Salvador and over the past 10 years has helped Claus and other local builders find many other workers to hire and train. “I’ve brought guys into businesses, like maybe 200 guys in all my construction experience.”
But then the pandemic hit. Things shut down and some of those workers left. Now, with such a low unemployment rate, Landeverde cannot find people to hire like before.
“It’s much more difficult,” he says. “They found another job.”
Claus says this has made it harder for builders to meet increased demand for homes during the pandemic.
“If I had twice as many guys, I still wouldn’t have enough,” says Claus, who now has five employees. “And my contractors, they all hurt for people.”
There is another very important obstacle to the construction of houses.
“Earth,” said Claus. “I was just trying to buy land to build five houses on. Unfortunately that land went to someone else who could put one or two.”
Claus says he wants to build more terraced houses or smaller houses on less land. It’s what many first-time home buyers can afford. But in many places, zoning rules don’t allow you to buy land and divide it up – you can only build one house with a large yard.
Overly restrictive zoning is a big problem nationwide, says Robert Dietz, chief economist for the National Association of Home Builders. “In some neighborhoods you just can’t build townhouses.”
“You have to build single-family units on larger lots than the market wants,” says Dietz. “It’s not a free market choice. It’s a rule imposed by the government.”
He says that in many parts of the country, the classic NIMBY opposition (not in my back yard) is preventing higher density units from being built. Existing homeowners who don’t want more traffic and more homes in their neighborhood are keeping what he says are outdated and exclusive zoning rules in place.
So to make a profit, builders like Claus have to do renovations or demolitions – buy an older house, tear it down, and build a bigger, more expensive new one.
“We are seeing a lot of reversals,” Claus says. “But it’s not increasing the housing stock. You’re replacing something, you’re not adding to it, so the net effect isn’t the best.”
Zoning changes can make a big difference. Some states and cities have changed rules to allow rental apartments to be built in law on existing homes. These are called accessory units or ADUs.
“Twenty percent of remodelers indicate that in the past year they have undertaken an ADU project, and the typical project can cost between $100,000 and $200,000,” Dietz says.
This is good for the rental housing supply, which is also very tight. But Dietz says we also need a lot more homes to buy.
“It could be a townhouse,” he says. “It could be a single-family detached house on a small lot of around 1,800 to 2,100 square feet, which is indeed suitable for a newly married couple moving out of their first apartment and into their first rung of ownership. ”
Right now, Claus says that due to restrictive zoning rules, he has no new home projects in sight that will put a home like this in a place where there weren’t previously any. House.