Source: Fortune
Summary
Bank of America (BofA) Research argues that the real cause of the current housing market crisis is not interest rates or institutional investors, but rather a decades-long failure to build enough homes. The bank’s report states that there is a “fundamental disconnect between housing policy and the underlying supply shortage.” The report notes that most housing decisions are controlled at the local level, where zoning rules and “Not-In-My-Backyard” resistance keep new supply from being permitted. The report also argues that focusing on Wall Street and non-bank lenders is not the solution, as they are not the main cause of the problem.
Our Reading
The numbers tell one story. Bank of America’s report highlights the chronic undersupply of housing as the main cause of the current crisis. The bank’s research arm notes that the supply of homes has not kept pace with demand, leading to a “lock-in effect” that could last six to eight years. The report also argues that proposals to fix structural supply shortages are politically unpopular and lack short-term payoffs. The bank’s mortgage strategists expect 30-year mortgage rates to move only gradually, from about 6.5% toward roughly 6% by 2027.
It’s all about the zoning board.
Author: Evan Null
