Building New Homes

Brian Potter’s reading list has a good housing subsection this week:

First, there’s a striking divergence in existing home price data versus transaction prices at the largest homebuilders: Lennar has cut average selling prices 25% since 2022, overall median sale prices on FRED are down, but the Case-Shiller repeat-sale index for existing homes hasn’t followed. I see one unintended implication of this: Even the largest homebuilders can rapidly pivot to cheaper starter homes wherever they’re in demand, as soon as such homes are legalized in a jurisdiction.

Second, a new CalMatters piece documents that California cities have approved their Regional Housing Needs Allocation (RHNA) housing plans but are building almost nowhere near their targets. “Fair Share”-style housing frameworks like RHNA place a massive implementation burden on localities to proactively plan for growth from scratch, leaving the details wholly under local control. Decades of zero or weak results in these frameworks are beginning to draw more expert skepticism. State laws (like SB79) that prescriptively modify local zoning by default, subject to a local equivalent plan if a jurisdiction has staff capacity to make such a plan, increasingly look like a promising way to bypass the pain, paperwork, and massive staff time losses to RHNA-like processes.