The Looming Housing Crisis with Judge Glock - Cicero Institute

This is a collaboration with Judge Glock on this Q & A regarding housing. As we know, the housing market is exploding. Judge Glock and I unpack these implications and much more.

We all know there is a housing shortage across the country, what do you believe to be the root cause of this??

There are two causes. One is the long-term issue of too many areas of the country having restrictive rules and laws against the building. Everything from environmental rules, to laws about so-called "wetlands," which are often just damp plains, to some restrictive zoning rules makes building very hard, especially along the coasts. The second reason is the recent explosion in demand caused by the shifts to at-home work during the pandemic. More people want larger homes and they want them further away from the center of the city, so there is a great need, and housing responds slowly to new shifts in demand.?

What do you think is needed to repair the relationship between developers and policymakers??

Policymakers need to understand that developers are the representatives of future constituents. They are not "greedy," they are just providing a product that people will soon inhabit.?

Everyone is feeling inflation, what effect is this having on the housing market?

Housing prices have been up about 20% in the last year, and rents about 17%, so much higher than the average of all prices of 8.3% in the same time frame. Rent prices will take time to affect most Americans since most have year-long contracts, so a lot of those higher rents will begin to pinch in the next 12 months.?

Many developers cite red tape as a barrier to developments when offering affordable housing. What do you think about this relationship??

There are lots of studies that show red tape is why it's harder to build affordable housing. In places like California, it adds up to $500,000 to the cost of a house. Here in Texas, it is still tens of thousands of dollars.?

Everyone wants to know if more development will lower the cost to rent and/or buy. What are your thoughts on this?

There are only two ways to lower the cost of renting and buying. One is to make a place so unappealing that nobody wants to live there (ie Detroit). Since that isn't a reasonable response, the only other way is to create more housing. If you can't lower demand, you must increase supply. Cities that do that see continued reasonable housing costs.

What is the most complex aspect of the housing crisis that could be simplified for readers??

The most complex part is the financing. American banking regulations after the 2008 financial crisis made it much harder for banks to lend on homes, and those should be simplified.

What policy changes would improve the housing crisis, specifically in Texas??

In Texas, many areas are amenable to building, but in Central Texas and especially around Austin there are real problems. I would say the best things that can be done is to speed up the permitting process, including by making the "shot clock" for approving permits binding, and by simplifying subdivision regulations for the new development.?

What are your favorite resources for housing policy??

The Calculated?Risk blog is a good source for updates. Economist Edward Glaeser's public writings are a good source for deeper understanding.

Lastly, what advice would you give to a homeowner?or renter that wants to navigate the challenges that the housing market is presenting??

I would not give any investment or other advice except to say that it's best not to try and "play" the housing market if you're just buying or renting to live. Make a decision that is good for you and your family now, and don't try to see every home as a potential investment or guess when it will get the best returns.?

Judge Glock is the Chief Policy Officer at the Cicero Institute. He was formerly a visiting professor of economics at West Virginia University. He received his PhD in history with a focus on economic history from Rutgers University. His work has been featured in Tax Notes, the Journal of American History, NPR, the New York Times, and the Wall Street Journal. He is the author of the book "The Dead Pledge: The Origins of the Mortgage Market and Federal Bailouts, 1913-1939."