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What should the new U.S. president focus on in the early months of 2017? Given the massive shortage of housing in many markets, a shortage that is making home ownership and renting unaffordable for many households, I would suggest several steps to spur housing construction. Here are three ways the president and Congress can proceed:
First, liberate community banks from the onerous financial regulations that arose out of Dodd-Frank, the banking reform law enacted after the financial crisis. Without a doubt, there are good aspects to the law, including safeguards against systemic risks posed by big banks and protections for consumers against abusive lending. But let small banks compete for customers based on how well they serve their clients rather than their ability to comply with complex rules that are more appropriate for giant financial services companies. Community banks are the main source of funds to local builders who historically have supplied the bulk of our country’s housing, both for owners and renters. They’re also a key source of loans for small-business startups that are essential to growth.
Second, provide more resources for community colleges and trade schools. The country has a shortage of skilled construction workers. Community colleges can help by training the electricians, carpenters, welders, and other skilled workers we need to produce houses, apartments, and commercial buildings.
Third, expand tax credits and other incentives for developers and investors to support new affordable housing for working households. Recall that the major-party presidential candidates agreed during the campaign on the need to rebuild the nation’s failing infrastructure. It’s not a stretch to see affordable housing as part of that equation.
These moves would be a boon for the economy as they address the inventory and affordability issues. An added benefit: heading off unwelcome calls for lawmakers to take even more draconian action on housing costs. Rent control, anyone?
