Some say we are in the pit of a new American housing crisis already. Not a decline, but a widespread lack of housing. Especially affordable housing. How do we fix that?
1. Crash the Market
One option for those at the top is to crash the housing market again. Tighten lending, make money expensive and hard to get, drive down property prices, and put strict rent controls in place.
Obviously, there are some big issues with this approach. It means a massive loss of value and wealth, which is just evaporated. Or more likely transferred to banks through repossessions until they cash in on it later. It will mean economic chaos and limited paychecks and bonuses for those in government who rely on property tax related revenues. It also means the need for much higher taxes to take care of all the blight and distressed properties. In other words, mostly counterproductive though countries do routinely try to manipulate housing markets.
2. Demolish Thousands of Homes
There are lots of empty and distressed homes and apartment buildings out there. While it sounds extreme, many just aren’t livable. Even if some are occupied now, many will cost more to repair than they are worth even if the property is given away. That creates all types of social and economic issues. If builders are going put up new housing, perhaps they should also be demolished old ones. Just like we replenish our supply of trees. If they say the existing housing stock is no good, then should builders have to pay to tear one or two down for every new one they put up. Or should builders be responsible for eventually taking down their work once it has passed its useful life? That may encourage them to build housing that lasts longer. As well as to use more recyclable materials. Those demo sites could make room for new homes or could be turned into public green space and neighborhood farming plots. Removing these homes can help communities, make room for functional ones, and can remove slumlord rentals which no one should be living in.
3. Build, Cautiously
Some say we need millions of new homes to meet the need of today’s booming population. Unfortunately, building on spec can be quite risky and can do a lot of damage to the environment. New properties always seem to be more expensive and push new price boundaries. By nature, that means they are never a more affordable option.
Technology is changing our world so fast that many property types are quickly becoming defunct. Unless we want our cities and neighborhoods littered with vacant buildings, then they may be best used as conversions to housing. This is true of strip malls, big box stores, office buildings, and industrial space. Converting them to apartments may be wiser than building from the ground up in many cases.
5. Fill Empty Housing Units
There are well over a million vacant homes in America. That doesn’t count all the vacant apartment units. There are so many that every homeless person could have as many as six each, and homelessness would be extinct. Right now in LA they even say there is a glut of too many mansions that no one wants to buy. So, by far the easiest, most common sense, solution on this list is to fill these properties by making them available and accessible to the millions who reportedly need housing, especially for regular workers. Individual investors can play a huge role in this. We know that flipping houses one by one is slow going, highly risky, and not always efficient. Even if we concentrated on apartments, certainly there is an opportunity to help squash the housing crunch, generate attractive returns for investors, and do it at a larger scale. Everyone from individuals to mid-sized funds and institutions can play a role in this.
ABOUT THE AUTHOR
Bill Zahller is the President of Park Capital Properties and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Properties in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalProperties.com for more information.