Nothing points out the dysfunctional nature of our housing market quite like Tornado Alley. How many times have we seen entire communities of 3 bedroom, 2 bath homes made out of wood and tarpaper be devastated by tornadoes only to be replaced by 3 bedroom, 2 bath homes made out of wood and tarpaper? In Florida and other coastal cities regularly ravaged by hurricanes, we still build square, wood frame houses with shingles on the roof when round or dome shaped concrete homes, that are far more wind resistant, would be a far better choice.
Another frustration is to see design competitions produce homes that are amazing in terms of sustainable materials, energy efficiency and space utilization only to find out that you can’t really buy one and the city wouldn’t let you build it even if you could afford the hefty price tag. Why, in a world with nearly infinite options for shelter, are we limited to houses that look exactly alike built in neighborhoods that look exactly alike?
Builders would love to build smaller and more affordable homes and apartments. If we turned builders loose to solve the problem of square wooden houses in areas prone to tornadoes and hurricanes, they would build us homes that could easily withstand 245 mph winds. America’s homebuilders are among the best and most inventive in the world. You give that clever group the specifications, they’ll build the house. Unfortunately they can’t because of a Byzantine network of regulation.
Blame The Government
Of all the complaining one hears about the government, our dysfunctional housing market, still mired in principles first developed in the 1950s, is the one that can legitimately be blamed on government. That blame runs from the federal government all the way down to the artificial government we call a neighborhood homeowners association (HOA).
The housing market and regulatory framework around it is dominated by vested interests. People who own homes want to preserve the value of those homes and many feel the best way to do that is to tightly regulate what homes look like. Building codes that specify what interior spaces should look like, how many people can live in a home and how homes should be arranged prevent us from building the type of homes we desperately need today. The housing regulations we have today have built up, layer upon layer, for decades. Most housing regulations were well intended and may have worked when they were passed, but how relevant are building codes developed in the 1970s today? That institutional inertia is one reason homes and neighborhoods all look the same.
Another quasi-government institution that stymies new developments in housing is Fannie Mae and government backed mortgages. Even if you can build a smarter, more efficient home, the chance of it getting a government-backed mortgage for anything other than conventional construction is almost zero. The inability to obtain mortgages is one of the chief impediments to building a hurricane proof concrete dome home in Florida.
The easy availability of government backed mortgages for conventional housing is why we consistently see price bubbles develop in the housing market. When people can borrow money, there’s no incentive to push for lower cost housing or make more efficient choices.
When it comes to houses consumers are boxed in, literally and figuratively.