Here’s a dad joke for you: “Why are housing costs like a dysfunctional elevator?”
Answer: They only go up.
In 2021, an illness made Stephen Smith acutely aware of the absence of elevators in his 3rd floor walk-up in Brooklyn, NY. Later, when he visited a far less wealthy city in Eastern Europe, his curiosity was piqued by the elevators of all shapes and sizes he saw in smaller, less costly buildings with fewer floors than his. 🧐
Steven’s inquiry led to some profound, surprising conclusions about the cost and complexity of building housing in North America.
So profound, he quit his day job in the real estate industry to create a nonprofit dedicated to lowering building costs in North America.
The TLDR: Elevators in North America, in stark contrast to much of the rest of the world, “have become over-engineered, bespoke, handcrafted and expensive pieces of equipment that are unaffordable in all the places where they are most needed.”
And they reveal why housing costs in this country have become almost absurdly inflated and seemingly impossible to control.
Decades of good intentions enshrined over time into a patchwork of federal, state and local regulations have created an interminably complex, expensive process that hinders our ability to build the things we need the most.
“The problem with elevators is a microcosm of the challenges of the broader construction industry — from labor to building codes to a sheer lack of political will.”
—Stephen Smith, Center for Building in North America
Here in the Carolinas, at least, we’ve seen firsthand how single-family construction—unlike multifamily and commercial—has been spared some of these inefficiencies. This is largely thanks to well-organized representation by home-builder organizations in the standards and rule-making process.
But, for the most part, that’s just the house. When it comes to utilities and infrastructure (sewer, water, electricity, roads, stormwater management, etc.), those same forces rear their ugly heads in the form of high labor costs, understaffed public agencies, permitting backlogs and over-engineered compliance schemas.
The result? We’re all stuck on that dysfunctional elevator: Housing costs, going up!
But it seems we may be reaching a breaking point. Politicians and policy makers across the ideological spectrum are facing the truth: When it comes to building housing, the status quo is not serving us well, and many are staking their political futures on doing something about it.
From California to Utah to Alabama to Massachusetts, state politicians are hitting the campaign trail to promote and defend measures to increase housing production, streamline permitting, and assist developers struggling with runaway costs. And representatives on both sides of the aisle are coming together to craft solutions to this pressing problem.
“Some issues become a horseshoe. We have different views of government, but sometimes we arrive at the same conclusion.”
—Cody Vasut (R) Texas House of Representatives
This is a very good thing, because it’s in these “laboratories of democracy” where the solutions will be found. And while the average home price is up 60% nationally over the last decade, the particulars of the causes and effects can vary significantly by city and state.
We’ve written extensively about this issue before, and we’ll probably write about it again soon. It’s going to take diligence, creativity and perseverance to tackle this problem, and it’s vital to our industry to make sure it’s done well.
In the meantime, if you are involved in a single-family, multifamily or mixed-use residential project, or preparing to start one, please get in touch. We’d be happy to share some of the lessons we’re learning here in the Carolinas, hear any ideas or solutions you may have, and connect you to others who are working to fix this dysfunctional elevator.
