Housing Supply Accelerator: An Interview with National Association of Home Builders Chairman Carl Harris

[00:00:02.980] - Emily Pasi

Hello, and welcome to another episode of the APA podcast. I'm your host, Emily Pasi, Director of Public Affairs at the American Planning Association. Joining me today is Carl Harris, Chairman of the National Association of Homebuilders. Carl and the NAHB are core partners, along with APA and the National League of Cities, for the Housing Supply Accelerator Partnership. The Housing Supply Accelerator is a national campaign to improve local capacity, identify critical solutions, and speed reforms that enable communities and developers to work together to produce, preserve, and provide diverse, attainable, and equitable housing options by realigning the efforts of public and private stakeholders in the housing sector to meet housing needs at the local level. Carl Harris, Chairman of the National Association of Homebuilders. Carl, thank you for being with us today.

[00:01:03.000] - Carl Harris

Oh, it's my pleasure. Any time that we can get together and talk about what we can do about getting more houses built in this country, I'm all in.

[00:01:11.650] - Emily Pasi

That makes two of us organizations here. Carl, let's start with this first question. Why is it important for community planners, home builders, elected leaders, realtors, and mortgage bankers to come together now to embrace this shared vision for local progress on housing supply?

[00:01:31.650] - Carl Harris

Well, we are at a crisis. With everybody recognizing that we're in a crisis, not only in home production, but in housing attainability, then we all need to come together because each one of us has a piece of the solution, and we need to come together to make that happen.

[00:01:51.560] - Emily Pasi

I love that. Each one of us has a piece of the solution. That's so right. Everyone has their distinct values that they're bringing to this conversation and perspectives, and together we can tackle this housing crisis.

[00:02:01.330] - Carl Harris

Absolutely. Because our members want to build in strong and stable communities. Strong and stable communities have good plans. Our home buyers want to move to those communities, a community that has a plan for growth, a plan for quality amenities. Our customers want to be part of those communities. The synergy that can be created from that One thing that I'd like to talk about is that the value of homeownership goes above and beyond just homeownership in itself. To the community, it's more than the incremental value of the new tax that they're going to collect from that new home being built, but the stabilization of that neighborhood, the stabilization of the workforce, the stabilization of the volunteer force, the adding of other customers, doorfronts, bring storefronts. And so we've got to make that happen.

[00:03:04.550] - Emily Pasi

We love that vision at the American Planning Association. Let's talk barriers to that vision. What barriers do home builders face to building more housing Nationwide?

[00:03:16.090] - Carl Harris

Land, which includes lots, lumber, labor, local regulations, which is where the planners come in. If we can give our builders a lot more confidence that if they start investing in land in your community, that they believe your long-range plan speaks to where that's where you want housing. If they were to go and purchase that, that they have some confidence that that can come to fruition, that we would really like to see zoning by right and not by maybe, so that we don't have to spend Our members don't have to spend more money to make that happen or to take that risk. Developers, builders, business people don't like to see risk because risk can be costly.

[00:04:14.420] - Emily Pasi

I know you talk about housing buy rate. That's something that a lot of planners across the country and big communities and small communities are working very hard to address right now. How do current market trends, like a tight labor market, new technologies that we're seeing coming online, compound existing barriers or create new opportunities for growing your housing supply?

[00:04:36.480] - Carl Harris

Well, the current challenges have to do with cost. So two years ago, the cost of a new The average new cost of a new home was $340,000. Two years ago, financing that house was a payment of $1,700. Today, $430,000. But under the current interest rates, the payment is $3,400 twice. Well, it's not hard to imagine that we know that the majority of the first payments you ever make on a house are predominantly interest. When the interest rate doubles, it's not a far stretch to see that that's. Financing is one. We're doing all that we can to see what we can do. We're seeing that our members are seeing what they can do about interest rate buy-downs, to buy down the interest rates. Working with the Association of Planners, that if we can work on that, then maybe we can take away the fifth L that we were talking about, which is local regulation. If we can decrease the cost Our National Association says that 24% of the cost of a new house is directly related to government regulation, and most of that at the local level. In the starter, usually when somebody forms a new A new household unit, it's in the rental market, but the cost of government in the rental market is 41% of the cost of a new apartment is directly related to that.

[00:06:14.260] - Carl Harris

Now, that's coming in design fees and locations and landscaping ordinances and all of that because it's rental property. They think you can tack onto that. But when we increase the cost of rental property, we decrease the savings ability of those rent to eventually be able to buy and attain a home.

[00:06:35.450] - Emily Pasi

You talk about the financing side of housing supply being a huge challenge that communities face. That was one of the key areas that we tackled as part of the Housing Supply Accelerator Partnership, which, of course, NAHB is a part of. Why was it important for the National Association of Homebuilders to join this partnership?

[00:06:59.790] - Carl Harris

We want to be part. We want to be part because we want to be part of the solution. We know that from time to time, the National League of Cities, the planners, we've been head to head on a number of issues, and how great it is that we can come together for solutions. Again, each carrying each part of that, and then we got to work out how the financing works. If we can work on the baseline of the cost of housing and the the attainability. Don't like using the word affordable housing because sometimes when you hear affordable housing, you're thinking lower-grade housing, you're thinking government housing. When we're talking about attainability at every rung of the housing ladder, and we recognize that plans should include for each of those townhomes, duplexes, fourplexes, condo-ization, if that's a word, of existing properties. If we can work on that and those can be included in the plan, then that's going to increase the availability of housing. When we do that, the availability, the attainability of housing will increase.

[00:08:13.490] - Emily Pasi

You make an important point, Carl, through the Housing Supply Accelerator, APA, NLC, the Realtors, the home builders, mortgage bankers, we're all working toward the shared vision of creating housing supply that is diverse, attainable, and equitable affordable, and meeting people where they are, and that attainability is a key piece of that work. How will the policy recommendations and solutions identified in the new Housing Supply Accelerator playbook help home builders and developers overcome these key challenges.

[00:08:48.610] - Carl Harris

We hope it's going to give people confidence. That confidence in the marketplace that they're making the right decisions to build in your community, to take a risk in your community, and how great it is that the current administration is talking about increasing housing production and getting behind that. So if we can get the administration behind the housing accelerator, how great would that be? How great would that be if that was the first thing that you check on the application for a block grant? Is that how have you participated or how have you put to work the new Housing Accelerator program in your community?

[00:09:28.970] - Emily Pasi

Hear, hear. The Housing Supply Accelerator playbook spotlights case studies from communities committed to increasing their housing production. What communities have you seen taking proactive steps to elevate, improve, and streamline their development processes? And what can we learn from these places?

[00:09:48.230] - Carl Harris

I think we can learn from those communities who recognize housing growth in their community is essential. If they want to attract new employers, if they want to attract new citizens, they must have a wide range of housing choices. We see communities like mine, which is more like a bedroom community, try to incentivize builders to come because they know if they build in a larger community, the chances of them selling a spec house is so much greater. We have seen communities come out and do what are called spec house interest rate carry guarantees. So once you finish a house in the community, they will guarantee up to 10,000 of your cold on that house if it doesn't sell. This community has done that, and they have not put out more than $900 in interest rate because they knew that if they build it, they would come. But those builders who are from outside their community came in and said, Why should I take a chance in a small community instead of a large community where I know it can sell faster? But this interest carry guarantee was a smart idea. We've seen in small communities that are looking for first responder Entry-level housing, we've seen them buy down with community seconds, the mortgage.

[00:11:21.420] - Carl Harris

If they stay in that house for 10 years, the second is forgiven, seeing that they're going to stay in that community. Because if you got a first responder that's driving 45 minutes to work in your community, the minute housing shows up somewhere else, then they can find a first responder job somewhere else. In the building market, we're saying you drive till you qualify, right? And so that happens. And so the closer we can get housing to jobs, the better off we are.

[00:11:53.710] - Emily Pasi

And that's a key challenge that we heard across our convenings through the Housing Supply Accelerator playbook There's businesses that are interested in locating in some communities, and the housing just isn't there. And so that's a turn off. We're wanting to put down roots in a specific community. And we know that so many planners, local leaders, and others are working together in coalition to really figure out those local innovative best practices that you just touched on a moment ago to drive up that housing supply. So, Carl, you have experience building homes all across the Midwest. Where are you seeing plans serve as a catalyst for this diverse, attainable, and equitable housing supply?

[00:12:37.940] - Carl Harris

When plans actually telegraph to the builders, we want growth. Then that's where our builders want to go. That's why I've chose to go to the communities that I build in because they want me there, not because I'm fighting them every step of the way. Good plans, Good planners make good communities, make it less risky for me to build in their community, and know that I'm not going to fight them every step of the way.

[00:13:11.170] - Emily Pasi

It's about mitigating risk. Agreed. An important lesson to take away here from our joint work together. What can cities and communities do to be better partners to builders and producing housing?

[00:13:23.560] - Carl Harris

I think it's opening up the line of communication. If planners met regularly with builders, and in our community, they do. They're part of our developers council that city planners and zoning officials come and have lunch with the builders periodically, and we talk about where the pains are, where the challenges are and what we can do to mitigate those. The worst thing is when you hear that goes against the plan, well, let's change the plan or something like that. I think it's open communication. We have the same a goal in mind. We just need to get there.

[00:14:04.770] - Emily Pasi

Beyond zoning reform, what other regulatory barriers to housing supply can home builders and planners tackle together?

[00:14:13.890] - Carl Harris

I think working together outside of the plan, but letting everybody recognize that housing growth pays for the community and it's an advantage to all. If we get away from designing nine standards in planning that adds cost without value, when we get out of political things that stand in the way of affordable housing, then we lock people and again, I said affordable, I meant attainable housing. Then we lock those other communities that don't have that opportunity into substandard, sub-efficient housing, and that's not what we want. To get the diversity that we need, we've got to open that up. That only comes when our builders see that it's just advantageous to build entry-level as it is at McMansions.

[00:15:16.870] - Emily Pasi

Well, as you pointed out earlier today, planners and elected leaders and home builders haven't always come together and see an eye to eye. But the state of our nation's housing supply crisis is at a critical point, and we can no longer not afford to work together to find common sense solutions that help create more diverse, attainable, equitable housing for all of the folks out there who need it. And so, Carl Harris, thank you for your partnership. Thank you for joining APA today. We look forward to what comes next through the Housing Supply Accelerator Playbook.

[00:15:56.400] - Carl Harris

Anytime we can work together, we're open to do that. And I thank you very much for having me. Anytime.

[00:16:05.190] - Emily Pasi

Thanks for listening to another episode of the APA podcast. Visit APA's website to learn more about the Housing Supply Accelerator. To hear previous episodes, visit us at planning.org/podcast. You can also subscribe to the APA podcast on Apple Podcasts, SoundCloud, Spotify, Overcast, or wherever you get your podcasts.