First American’s Fleming discusses low housing supply

First American’s Chief Economist Mark Fleming joins HousingWire Digital Producer Victoria Wickham to discuss his recent report that examines the U.S. housing market’s lack of housing supply and why he believes this historic housing supply shortage is likely to continue into 2021.

During the interview, Fleming addresses two challenges impacting housing supply. The first is inventory turnover; the second is home construction, with the housing market having been under-built for more than a decade.

Here is a small preview of the interview with Fleming — be sure to watch the full video above. The transcript below has been lightly edited for length and clarity.

HW: What else can we do to fix this shortage in the housing market and our aging supply of the housing stock?

Mark Fleming: When you look at housing policy, in this country, it’s mostly demand-driven. That is, we’re trying to find lots of different ways to make buying a home more affordable. If you think about the GSE mandates and low down payment loans for first-time homebuyers, right now, significantly, historically low mortgage rates, which increase buying power, are all driving the demand side of the market. That’s all well and fine when there’s lots of supply relative to demand that helps people get into homes. But when you’re in an environment with really tight supply, and you put pressure on the demand side, increased demand through policy, that inflates house prices even faster. The solution really needs to be supply-side oriented solutions; how do you drive the ability to build more homes and sell more homes? That’s less of a federal issue than it is a state and local issue because much of that is driven by regulatory and zoning criteria. Policy prescriptions for solving the problem have to really be done at the local level, not the federal level.