houston we have a problem

Houston, We Have a Problem

John WilliamsAdvocacy, President's Message

Houston is facing some serious problems, but the good news is that YOU are the answer. There is turmoil in the housing industry caused largely by costs escalating beyond the consumer’s ability to afford them. There is demand for new housing, there is a lack of adequate supply of new housing, mortgage rates are still below historic averages, but sales are slumping for most builders. Why? Affordability.

Housing is under attack and it is time we circled the wagons to defend our industry and affordable housing. The National Association of Builders’ economic studies found that the average regulatory costs account for an average of 24.3% of the price of a new home. This unnecessary burden is compounded by increased land and construction hard costs stemming from material shortages, tariffs, as well as continued historically high labor rates. Recent research has found that housing stock is well short of the housing needs in the United States and it’s forecasted to only get worse.

Sam Khater, the chief economist for Freddie Mac sheds some much needed light on the problems ahead:


“From 1968 to 2008, a span of 40 years, there was only one year in which fewer new housing units were built than in 2017—and this despite rising demand in a growing economy,” he said. “We estimate that over the next decade, young adults will add about 20 million households—and those households will need a place to live. Until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households.”

The research goes on to find that the current annual construction rate is roughly 372,000 units shy of the required long-term demand. When you consider rising land, construction material, and labor costs coupled with increased government regulation, you find the cards are stacked against us. Even if we can find the people and materials needed to build the homes, if the buying public is priced out of the market, everyone loses. This is a problem with far-reaching effects.

Houston is quickly losing what made us so great. We live in a land of opportunity and every day that we don’t take a unified stand as good stewards of our industry, affordability becomes more and more of a pipe dream instead of a common reality. As the cost of living aggressively escalates, businesses will look elsewhere for places to set up shop. As housing starts fall, so does regional revenue.

According to NAHB, “Construction of 100 new homes creates almost 300 jobs, generates $28 million in wage and business income, and produces $11.1 million in revenue for state, local and federal governments.”

With less business comes less opportunity. This spiral rapidly takes us farther and farther from the Houston we all love and know. The problem is bigger than any of us, but we must recognize that the problem is also smaller than all of us when we work together.

Some people in our industry focus on making as much money as possible and “getting out at the right time,” whereas a good steward will work to leave the industry better than they found it. One of the GHBA’s most focused goals is protecting and promoting affordable housing, but only a small fraction of members choose to engage in efforts to work towards this objective. How are YOU part of the solution? You are a part of the greatest homebuilding association in the country, but we need your help. Now is the time to ENGAGE.

Engagement comes in many forms and the GHBA is the perfect place to invest and focus your energy. HOME-PAC is our political action committee. Membership comes in a variety of levels starting at $1. For $1,000 you can become a Trustee, which allows increased access to interviewing political candidates, voting on how we disperse our funds, as well as attending a myriad of fundraisers and political events. This is easily the best investment you can make in yourself and your industry.

Another avenue is Rally Day. On March 20, the advocacy event is hosted at the Texas State Capitol where association members visit with their local legislation and key policy staff. If you haven’t been, start here.

Further, our Government Affairs Committee is always looking for more involvement from industry experts. In fact, our first meeting of 2019 is this month, Tuesday, February 26, at 10 a.m. at the GHBA. All interested members are welcome to attend.

These are a few of the many ways that members can engage further and lead our industry and community through these troubled times. Houston is Texas Strong. Let’s show the world what we are capable of.

About the Author

John Williams

2019 GHBA Board President John Williams is a local home builder with K. Hovnanian Homes.