America's housing crisis: Realtor.com CEO says there is way to solve it

Realtor.com CEO Damian Eales weighed in on what measures are needed to address America’s housing crisis, taking particular aim at excessive regulation. 

The U.S. has been contending with affordability and supply issues in its housing market for some time, making it difficult for people to purchase homes. 

"America is in a state of gridlock in terms of housing transactions where we’re really, for the last two years we’ve been hitting 30-year lows," Eales said during a recent "Mornings with Maria" appearance. "That’s largely because of high interest rates. Most American mortgages – in fact, 70% of American mortgages – are below 5%, so prevailing rates are closer to 6.8%, perhaps even going up shortly. Sellers are very reluctant to sell because they’re going to have to refinance at a much higher cost."

High costs of homes compared to income have also made it challenging for people to enter the market, the Realtor.com CEO said.

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In the U.S., there is a supply gap of 3.8 million homes as well, according to a report released by Realtor.com in March. 

Eales said Realtor.com was "optimistic that all of the moving parts of the economy will fall into place such that there can be easing of mortgage rates."

The 30-year fixed mortgage rate came in at 6.81% on average the week of April 24, according to Freddie Mac. 

"But I would say that even if mortgage rates were to drop substantially, that would free up the market, but it certainly wouldn’t address this issue of a lack of supply, which the president is also trying to address in terms of freeing up federal lands," Eales remarked.

The Trump administration’s Joint Task Force on Federal Land for Housing was unveiled in March. The goal is to pinpoint "underutilized" federal lands that could be "suitable" for housing development as well as make land transfer processes smoother and promote measures to boost affordable housing, according to a memorandum of understanding. 

"It’s not just an issue for federal policymakers," Eales said. "This is really an issue for state and local governments to free up the ability to build those homes." 

He said federal and local governments need to ease regulations and get rid of costly red tape to help with housing affordability and supply.

"It is estimated that one-quarter of the cost of any new home in this country is due to red tape, so freeing up regulations. I think environmental regulations in many states throughout the country have been really weaponized to just prevent development of any type. That has to be addressed," the Realtor.com CEO said.

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"And I think that a combination of that and looking at zoning regulations that prevent multifamily developments," he continued. "Now, you don’t want multifamily developments in every neighborhood in the country, but around public transport stations, you do want multifamily developments. That would ease the housing crisis that exists today." 

He told "Mornings with Maria" there were "a bunch of other areas" of regulation that could also be changed, giving an example of some rent seekers who "take advantage of the planning process." 

"That’s not a federal government issue, that’s a local government issue, and it’s a state government issue," Eales said. "So it’s one thing for the Feds to free up federal lands, but it has to come at a bipartisan sense with local and state government reducing regulation and wanting growth in their economy." 

His appearance on "Mornings with Maria" came the same day that Realtor.com bestowed letter grades on America’s 50 states and Washington, D.C., in its "Grading the States: Affordability & Homebuilding Report Cards" report. 

Only three states – South Carolina, Iowa and Texas – earned scores in the A range when it came to affordability and their "ability to meet future supply challenges through new construction," according to Realtor.com.

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Meanwhile, seven states got an "F" in the report, with New York, Massachusetts and Rhode Island at the very bottom. The others with that letter grade were identified as Oregon, Connecticut, California and Hawaii. 

Eales indicated he thought regulations were hampering affordability and homebuilding in some states toward the bottom of the ranking.

"I think it’s also a growth mindset," he added. "I think that the South and the Midwest have a, generally speaking, those states have a real growth mindset, they want new housing development."

For March, the National Association of Realtors pegged the median price of existing single-family homes at $408,000.

New single-family homes purchased in March had a median price of $403,600, according to the U.S. Census Bureau.