'Stop Talking About Affordability' — Real Estate Exec Calls On Lawmakers To Act On Housing Costs

A top mortgage industry executive issued a message to Washington lawmakers this week, calling for immediate action to address America’s mounting housing affordability crisis.

Laura Escobar, newly appointed chair of the Mortgage Bankers Association and president of Lennar Mortgage, told industry leaders at the MBA’s annual conference in Denver that the American dream of homeownership is slipping away from an increasing number of families.

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“We’re on the verge of a vicious cycle, in which fewer and fewer people can afford the American dream of homeownership. That’s not good for America,” Escobar said Monday, addressing the trade group’s 275,000 members.

The housing shortage has reached critical levels, with the U.S. facing a deficit of 1.5 million homes, according to Escobar. She pointed to decades of regulatory barriers that have made it increasingly difficult to construct new homes or renovate existing ones, particularly for smaller builders.

Government regulations add nearly $94,000 to the average price of a new home, according to Market Watch, which cited a 2021 National Association of Home Builders study. Construction costs have risen sharply, with labor and materials expenses jumping 31% since the start of the COVID pandemic.

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The impact of the constraints is evident in markets nationwide. In Las Vegas, 34-year-old Andy Balmert spent eight months searching for a home before finally purchasing a two-bedroom condo, made possible only through a $50,000 grant program targeting middle-class buyers.

“Not as many are wanting to buy houses. But even those who want to simply can’t without some sort of assistance,” Justin Jones, a Clark County commissioner, said to Bloomberg.

Restrictive zoning laws compound the problem, with roughly 75% of residential land in the U.S. restricted to single-family homes, Escobar noted. She plans to campaign for loosening regulations in mortgage lending and home building.

The crisis has particularly affected middle-income households. Federal loan data cited by Bloomberg shows that 58% of mid-income households approved for mortgages last year had debt-to-income ratios exceeding 40%, which is the highest level since at least 2018.

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“Enough is enough,” Escobar said. “My message to every policy maker in Washington D.C. is going to be simple. Stop talking about affordability — and start delivering on affordability.”

Market conditions remain challenging, with 30-year mortgage rates hovering near 7% and home prices at record levels. According to Fannie Mae, returning to 2016-2019 affordability levels would require either a 38% drop in median home prices, a 60% increase in median household income, or mortgage rates falling to 2.35%.

As the housing crisis moves to the center of national politics, both major presidential candidates have proposed solutions. However, some experts remain skeptical about federal intervention’s effectiveness.

“The focus has to be on the supply side,” Mark Fleming, chief economist at First American Financial Corp, said to Bloomberg. “The challenge is that there’s not a lot that the federal government can do. A lot of it is sort of local zoning, local regulatory hurdles.”

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