Change is Coming to Address Affordable Housing

By Sean Faries, Land Gorilla CEO

This article first appeared in HousingWire Pulse,  on July 3, 2019


It’s now been almost 7 years since people started to take notice of the current housing shortage and become angry over the skyrocketing costs for housing.  We have seen local governments (city/county) change course over new housing policy. They have been moving away from ‘nimbyism’ and ‘anti-growth’ mentalities to pro-active solutions to meet the housing needs of their communities.  

We have recently seen states like California introduce ambitious goals for new housing and push hard to make it a reality, so much so that the state’s Governor, Gavin Newsom, has filed lawsuits against cities like Huntington Beach for failing to develop an affordable housing plan.  California has even created a state pilot program to completely bypass local permitting requirements on accessory dwelling units (granny-units) to reduce the costs and time to complete. 

I find it interesting that the average American doesn’t seem to be aware of how we got to this crisis which has placed the American Dream out of reach. Depending on where you live, individual drivers such as government regulation have played the largest role in housing affordability. Recent studies by the National Association of Home Builders have shown the cost to build a home has increased by over 25%.  Across the United States, permitting and local government fees swing from a few thousand dollars and a couple of weeks to obtain, to some areas where it can be closer to $100,000 and take years just to get permission to build a home on land that already meets the zoning requirements. These are just a few of the many examples that have led us to our current housing crisis.  

As of Tuesday, June 26th, the President signed an executive order to tackle the lack of affordable housing and make it a priority to remove red tape.  This can have a meaningful impact on every family and is long overdue. Growing up, my father always said, ‘occasionally and eventually, the federal government can get it right’ and today this couldn’t be more relevant.

The government agencies that provide housing programs to the US mortgage market have all introduced updates and changes to their renovation and new construction programs.  FHA has made updates to their 203K renovation program and reduced outdated requirements on new construction inspections. USDA has introduced a new renovation program and more importantly a completely revolutionary new construction program.  VA has provided better clarity in their guidelines to make it easier for lenders to make renovation loans to veterans. The GSEs, Fannie Mae and Freddie Mac, who have been under government receivership since the financial crisis, have made major strides in trying to provide affordable financing options.  Fannie Mae has made significant improvements to their HomeStyle Renovation program to make home ownership possible for more consumers that need to make improvements on existing homes. Just within the last few weeks, Freddie Mac rolled out a completely new consumer renovation loan program. Each of these changes from both the GSEs and government agencies make a difference in either adding new housing inventory or prevents our existing inventory from becoming obsolete.  

We are now seeing change in the finance industry and every level of government.  Looking into the future we will still have a massive shortage of inventory and it will take years to start moving the needle.  It’s been said that the affordable housing crisis is a generational problem and that stands true today. I believe that we have now hit the tipping point and families will begin to have more affordable housing options. 

Sean Faries | Land Gorilla CEO

Sean Faries is deeply committed to helping find solutions to the nation’s housing crisis and increasing housing affordability. As CEO of Land Gorilla, he is a pioneer of technology solutions that meet the complex needs of an ever-evolving construction lending industry. This has enabled more lenders to successfully participate as they reduce construction non-completion, monitor contractor performance, proactively manage potential portfolio risks and radically improve the borrower and builder experience. These innovations are changing the way construction loans are managed and provide the critical infrastructure necessary to address our national housing shortage.

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