A Dingbat and the Presidents Housing Order

Trump’s latest order on housing affordability has me going dingbats… again.

Earlier this year, I wrote about smaller, simpler homes, fewer parking requirements and the possibility of building something a first-time buyer could actually afford. These structures have a name, and were / are called dingbats. Now, the White House is looking at similarly affordable units, manufactured and factory-built housing as part of the affordability solution.

Progress?

September’s new-home numbers show 8.4 months of supply, according to Calculated Risk’s Bill McBride (via new data from The Census Bureau). Sales are down 5.3% from a year ago. That sounds like plenty of inventory, especially if you’re a builder paying to carry it.

But inventory and affordability can move in very different directions. A house can sit unsold while a family down the street keeps renting because the payment doesn’t work. Location matters, too. Available homes three hours from your job don’t solve much.

McBride’s other headline is particularly interesting: the median new-home price is down 13% from its peak, reflecting a change in the mix of homes sold. That doesn’t mean every house got a 13% discount. It means what sells matters to the number we call “the market.”

That brings me back to the dingbat. Smaller footprints, simpler finishes, more homes on a smaller piece of land, and less mandatory parking where transportation alternatives exist. There are real costs we can question before a buyer ever applies for a mortgage.

Trump’s order pursues savings on mortgage insurance and refinancing, which could help eligible borrowers. Its manufacturing task force also has 180 days to recommend ways to reduce production barriers. The opportunity there is worth watching, especially if local permitting allows those homes to get built.

In my recent Airbnb piece, I argued that supply matters, obviously. But if the demand is for different types of structures, in different locations… we still have the same affordability issue. The next question is more specific: what can we build, where can we build it, so that the people that need it, can afford to live there?

We have a need and a desire to help people find homes they can afford to buy, and we also want more transactions. In my mind, any and all solutions that can help, ought to be considered. Because when we start with housing affordability, and monthly payments as a measurement, a first-time buyer’s budget is a pretty good place to start.