NAR panel: How to encourage new housing — and homeownership
The U.S. needs more homes, but policymakers need to work with communities, states and the mortgage industry to foster development and increase access to loans.
Key points:
- Easing regulations to spur development was the theme of a June 2 panel discussion at NAR’s legislative meetings this week.
- At the local level, cities need to help homeowners understand why housing is needed. States also play a key role in moving new policies forward, panelists noted.
- Relaxing mortgage rules could help more people qualify for loans and give builders an incentive to serve lower-income buyers — without risking a subprime lending crisis.
WASHINGTON, D.C. — A panel discussion on deregulation was packed with Realtors on June 2, an indication that members of the National Association of Realtors are concerned about the lack of housing inventory across the country and eager to see solutions.
The importance of community buy-in
A key takeaway from the session at NAR's mid-year legislative meetings is that community involvement is essential when municipalities are considering zoning or other regulatory changes to encourage residential development. Otherwise, a small group of neighbors can easily sink plans to build more housing. Aliya Gaskins, mayor of Alexandria, Virginia, said she's learned that the message matters.
"We have an opportunity to do a much better job of explaining to people what the purpose was, what it's actually intended to do. And then how do we use this in a way that still fits within our neighborhoods and allows us to give people the options they want," Gaskins said.
State-level policies can help move the needle
Emily Hamilton, a senior research fellow and a director at George Mason University, said she's also seen success when states step in to create reasonable policies that won't be thwarted by a neighborhood that doesn't want change.
She noted that Montana, for example, has followed the lead of several other states by legalizing accessory dwelling units across the state, allowing multifamily homes in commercial zones and streamlining rules on manufactured housing.
"I think what we're seeing is tons of learning from policies that have been implemented across states, but maybe not enough learning about implementation and actually looking at specific rules that are leading to big improvements in housing supply and affordability," Hamilton said.
Should lending rules be relaxed?
Zoning and development aren't the only areas that may need reform. If communities want to increase homeownership, the mortgage industry might also need to rethink its rules.
Shane Phillips, housing initiative manager at UCLA, noted that work done by Kevin Erdmann showed that since mortgage regulations were tightened following the 2008 financial crisis, fewer people with a credit score below 740 are buying homes.
"That's bad for them, but it's actually arguably been bad for housing supply as well, because if developers can no longer build for that population, we're just not going to build as much housing anymore," Phillips said.
"So I think there's a real opportunity to make some fixes there…tweaking the regulations does not mean throwing out all protections and having a repeat of 2007 and 2008, but there is some middle ground there, for sure."
VA loan fix appears to be working
Prior to the panel discussion, Veterans Affairs Deputy Secretary Paul Lawrence also discussed deregulation with a focus on supporting military veterans, and he shared an update on how loans have been handled since the NAR settlement.
The settlement mandated that buyers sign an agreement with their agent, putting them on the hook for payment — but that was a problem for military borrowers, because they couldn't use the VA loan to pay their agent. That was addressed with a temporary revision in June 2024.
Lawrence said in the past year, his agency hasn't seen any indications that the revision has discouraged veterans from using their home loans.
"We're going to continue to monitor how the update is working for veterans… and we'll keep any changes on that principle," Lawrence said.