This regularly scheduled column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at [email protected].

Question: How much of an impact do you think the ROAD to Housing Act will have on housing affordability in Arlington?

Answer: The Road to Housing Act became law ten days ago, with the stated goal of improving housing affordability in the United States.

I don’t see many policies in the Act that will improve affordability in the Arlington/Northern VA/DC Metro markets, outside of incentives for more affordable multi-family housing, but there are policies that should improve affordability in other markets that are more saturated with institutional investors that own swaths of single-family homes (e.g. Atlanta and Phoenix) and for manufactured/mobile homes.

The Local Conversation Needs to Change

If we are going to improve affordability in our market, most of the change has to be done locally/regionally, not nationally, but it requires a paradigm shift in how we discuss and solve for housing affordability.

Affordability Disconnect: Near Term Expectations Not Realistic
A disconnect between housing affordability expectations and reality prevents the right community and political conversations from happening. We expect/demand housing affordability immediately, ignoring the difficulty, and consequences, of achieving it that quickly.

Stable and healthy housing affordability is a long-term process requiring gradual change over a 10-15+ year period.

Demand-Side Solutions Won’t Work
Demand-side solutions, such as lower interest rates or easier financing, artificially inflate home values, as seen during the COVID-era housing boom and early 2000s. They are not a good long-term solution to affordability because they push values even higher (along with your property taxes) and affordability gets worse when rates/lending normalize and no longer provide artificially low monthly payments.

Supply-Side Solutions Are Not Immediate
Most policy discussions focus on supply-side solutions: building more/faster and denser housing (e.g. Arlington’s Missing Middle/Expanded Housing Option), incentivizing more existing home sales, or disincentivizing concentrated ownership by companies and individuals. Econ 101 tells us that more supply = lower prices = affordable housing (winner winner!).

This is the only path to stable, long-term housing affordability…BUT, at current interest rates, prices must drop 30-35% in the United States to become affordable, at current income levels. A 30-35% drop in home values would devastate the economy, so a supply-side solution won’t (shouldn’t) provide immediate affordability. (more…)