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New regulations could benefit homebuyers being priced out of the market

(HOUSING) If new regulations are approved, the willing homebuyers forced onto the sidelines could finally have a buying option previously unavailable to them.

condos regulations

HUD Acting Deputy Secretary and Federal Housing Commissioner Brian Montgomery spoke at the 2019 Realtors Legislative Meetings & Trade Expo, pouncing on the widespread challenge of affordability in the housing market, as willing buyers continue to be squeezed out.

With over 11,000 National Association of Realtors (NAR) members in Washington D.C. for the annual conference, Montgomery spoke directly to those in the field that witness the phenomenon first hand.

“You all know better than most that affordability is an enormous challenge in many markets around the country,” he affirmed. “Large constraints on the housing market by regulations have exacerbated the shortage for hard-working families who are employed and willing to buy but continue to be priced out.”

Montgomery pointed to job growth, wage gains, and low unemployment rates as “good news” and “an additional shot in the arm,” but pointed out that housing is being restricted by overregulation and zoning laws.

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“The combination of regulatory overreach and an aging housing stock has meant not enough affordable units are left – or worse, being built,” he said. In that same vein, NAR’s Chief Economist, Dr. Lawrence Yun has been sounding the alarm about lowered housing starts as restrictive for the entire market for years.

Montgomery stated on stage that “zoning, environmental and sometimes labor restrictions have made it more difficult for areas across the country to meet the growing [housing] demand.” He added, “We will need continued wage and economic growth and regulatory reform to mitigate affordability constraints. This will also require that not just HUD but states and localities ease the regulatory burden and other impediments to development.”

So where is the relief?

The collective hope is that the Federal Housing Administration’s finalization of a new rule surrounding condominium policies will bring some relief. NAR supports the rule revisions, which include allowing owner-occupancy level to be determined on a case by case basis,. This would allow up to 45% commercial space without documentation and implementing a five-year approval period for project certification.

Montgomery points to condos as traditionally being a “mainstay of affordable housing for both first-time homeowners and seniors.”

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“We anticipate that the updated regulations will be more flexible, less prescriptive and more reflective of the current market than existing provisions. It may also include single unit approvals for loans that meet HUD standards for unapproved projects, allowing HUD to set the specific percentage,” Montgomery noted, adding that the final rule is under review by the Office of Management and Budget.

The end of the process is in sight, and could bring relief to homebuyers who are ready and willing, but currently left out.

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