Key Points Discussed:

• The death spiral of home building costs and why it's a growing concern.
• Issues like lumber prices, labor costs, and economic pressures are causing higher building costs across the U.S.
• San Jose, California:
  • Home building costs are reaching record highs, particularly for affordable housing.
  • The cost of building one unit of affordable housing is $750,000 to $1 million.
  • Builders struggle with the economics of selling or renting these homes at a price that justifies the high costs.
• San Francisco area:
  • Affluent neighborhoods' "Not in My Backyard" (NIMBY) attitude is blocking new housing projects.
  • Example: A 500-unit building project was delayed by two years, making the project no longer financially viable due to increased costs.
  • Another example: A 3,155-unit building project faced 12 years of delays due to court objections and permit system issues.
• State Regulations in California:
  • California's state law requires a certain amount of affordable housing, but delays are leading to severe consequences like losing state funds, fines, and loss of land-use authority.
• The domino effect of delays and regulations is exacerbating the housing market crisis, contributing to a national 2 to 5 million home deficit.
• The shortage in new home construction is pushing home prices higher, especially in the face of higher interest rates, making homeownership increasingly unaffordable.