MReport July 2021

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8 | M R EP O RT MDWELL Tackling Supply Shortfalls Experts suggest the No. 1 way to replenish housing inventory. T he shortage of affordable housing is a forefront issue for housing-policy decision-makers and is at the center of endless recent studies. One such survey comes courtesy of Zillow Research, which published "Zoning Changes Most Effective Path to Boosting Hous- ing Supply," for which the authors considered insight from a panel of one-hundred-plus subject matter experts and economists. Zillow's panel expects home prices to continue rising and construction to slow in the coming years, with high costs as the main barrier. They deduced that relaxing zoning rules to allow for more and/ or more efficient new home construction would be the most effec- tive way to increase supply. On average, the panelists told Zillow they expect new housing starts to end the year 2.5% below December 2020 levels and to fall an additional 2% by the end of 2022. Zillow researchers address the fact that builder confidence has consistently stayed at very high levels since last summer, making the prediction seem a little incon- sistent; however, Zillow points out, "optimism may not be enough on its own to make a meaningful dent in the massive shortfall in construc- tion since the Great Recession." Less restrictive zoning was the single most effective strategy to help increase inventory; it is the No. 1 route chosen by 56% of the respon- dents. Other ideas for increasing America's housing supply, according to a panel of experts: In your opinion, what would be the most practical and effective actions to increase housing supply in the U.S.?* Relax zoning rules Ease the land subdivision process for landowners Relax local review regulations for projects of a certain size Accelerate adoption of new construction technologies (for example, modular building, 3D printing of some components Increase trade training/education to build construction workforce Reduce mandatory minimum lot sizes Relax work permit restrictions Provide tax incentives for private development of municipal infrastructure Relax restrictions on ADUs Incorporate price protection clauses into long-term supply procurement contracts Improve access to construction financing 111 63 61 55 54 44 26 25 20 17 13 *86 panelists were asked to select up to three options, and rank in order of expected effectiveness. Scores were computed by weighting the factors selected by their effectiveness ranking. Source: Zillow Economic Research and Pulsenomics Q2 2021

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