Jerry Howard
Jerry Howard

On Tuesday, Jerry Howard, CEO of the National Association of Home Builders (NAHB), shared key housing market challenges and solutions with executives at the National Lumber and Building Material Dealers Association Spring Meeting and Legislative Conference in Washington, D.C. He focused largely on the importance of housing affordability shortly before attendees were set to lobby their representatives on Capitol Hill later in the day.

Howard stated that the NAHB is focused on making houses affordable to the average American. “Six years ago, 80% of the homes on the market were affordable by the average American. Today, that number is under 60% and it’s continuing to decline. For the first time in 15 years housing affordability is a major, major problem.”

To be clear, housing affordability is measured by the average American’s ability to afford a mortgage for an average-priced house or rent for an average-priced apartment.

There are three main factors that are making new homes financially unattainable for average Americans, Howard posited: regulation, the industry’s labor shortage, and cost of goods.

Housing Regulation
One particularly weighty issue pertains to regulation. “Right now, up to 30% of the cost of a home is due to regulatory compliance. The worst-case scenario is San Diego County, California, where over 40% of the cost of building a house is in regulatory compliance,” Howard said.

He described a scenario that underscores how overregulation can harm the industry: “You have the far-left wing that wants to regulate the production of a house and increase the cost. Then, they want to tax the consumer of that house extra so that they can come back [with] a subsidy to lower the cost of the house. Now, that doesn’t make sense in any way, shape, or form if you’re running the country like a business. That’s one of the key points that we’re trying to make—overregulation is crushing us.”

Construction Labor Shortage
The NAHB is also working with legislators to resolve the industry’s labor shortage problem. “Right now, there are over 300,000 vacant jobs in the construction sector … and we’re not even in prime construction season, yet. We have to do something to increase our labor supply.”

NAHB recently hosted the International Builders’ Show in Las Vegas. Howard stated that Nevada has a homeless veterans problem that is “second to none. So, we’re working with that state government to train veterans in the construction trades … and get them jobs with our members. By the way, … our members report that these veterans that are trained in the trades become the best employees that they have. They’re on time. They have the soft skills. They have a sense of responsibility, a sense of respect for what they are doing. They’re tremendous.”

He stated that the NAHB is also working to promote industry jobs to at-risk youth—those who can’t get into college or who don’t want to go. Too often, Howard said, at-risk youth end up on the streets, where they can be exposed to drugs and crime. To help, the association is trying to reach them before their lives take a turn for the worse. For its part, Howard stated that the association is communicating with teachers and guidance counselors in high schools and middle schools in the United States to show them that at-risk youth have career options and that “there are good paying jobs” that don’t require a college education.

“When we first started going into these places, we were basically laughed out,” Howard lamented. “We weren’t laughed out because the people were callous. We were laughed out because most high schools and all guidance counselors are graded by … the percentage of their students that go into four-year colleges. So, they are forcing these kids into colleges that don’t want to be there. The kids flunk out or drop out and there you have this sense of hopelessness. We’re working to change that mindset and, at the same time, train some of our at-risk youth.”

Considering the industry’s labor shortage, one attendee asked about the NAHB’s stance on immigration. “This country was built on the backs of immigrant labor,” Howard said. “We need to have immigrant labor.”

In a meeting with President Trump, Howard stated, “What he said to me was, ‘We will have a merit-based immigration system before I leave office.’ Now, what I had followed up on that is merit-based traditionally hasn’t meant people who can work in the construction trades, or people who work in saw mills, or people who work in restaurants and he understands that. Our policy is that we need comprehensive immigration reform, that there should be a path to citizenship, and that skilled laborers in the construction trades should be considered just as skilled as computer programmers, computer engineers, and healthcare professionals.”

The Cost of Goods
The next hot-button issue for the NAHB pertains to the Canada and U.S. softwood lumber dispute. U.S. tariffs imposed on imported Canadian softwood lumber, the NAHB and others in the construction supply industry suggest, are increasing the cost of building new homes to a point where they are no longer affordable to many would-be home buyers.

“We’ve been assured that, although they are focusing on the big Canada trade agreement right now, there are conversations ongoing with respect to the Canadian Softwood Lumber Agreement,” Howard said. “But, I will also tell you that it is the goal of the President and the administration to sort of wean ourselves away from Canadian lumber and to increase the domestic harvest in our national forests.”

One way to do that is to become more self-sufficient. “A healthy forest has about 100 trees per acre. In our national forests, right now, they average about 300 trees per acre. They’re diseased, they’re dying, they’re dead and we’re not allowed to harvest them. It doesn’t make any sense. So, the administration … is getting ready to put a significant push on that for two reasons: One, it will decrease our level of support on imported goods and, two, it creates jobs in rural America. … We can create American jobs. We can reduce the cost of lumber. We can reduce the costs of housing.”

Howard suggested that the issue of housing affordability will become more mainstream. “I believe that, for the first time in my career, you will see housing affordability be an issue in the 2020 presidential election. … If we can get this to be a subject of debate and discussion in the 2020 campaign, it doesn’t matter who wins the election from that perspective, what happens is we win.”