Solutions to the housing shortage

Summary

Marketplace: Solutions to the Housing Shortage
Host: Kai Ryssdal
Release Date: November 8, 2024

In this episode of Marketplace, host Kai Ryssdal delves into the multifaceted issue of the housing shortage in the United States, exploring a variety of expert opinions and potential solutions. The discussion unfolds through several segments, encompassing economic policies, consumer sentiment, energy management, agricultural challenges, and finally, a comprehensive analysis of strategies to alleviate the housing crisis.

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Economic Policy and the Federal Reserve

The episode opens with Kai Ryssdal engaging in a conversation with David Gura from Bloomberg and Kathryn Rampell from The Washington Post about the intersection of fiscal and monetary policies amid political transitions. Ryssdal remarks, “[...] inflationary fiscal policy from the Trump administration and a new Congress is going to run headlong into a monetary policy regime that is loosening and therein be dragons” (01:32). Rampell discusses Federal Reserve Chair Jay Powell's disciplined stance, noting Powell's reluctance to speculate on future administration actions. She highlights the challenges posed by conflicting fiscal and monetary policies, emphasizing the potential for a "push-pull" dynamic that could destabilize the economy (02:00).

David Gura adds to the conversation by reflecting on Powell's recent press conference, where the Fed Chair firmly stated he would not resign if asked by the incoming president, signaling the intense pressure on the Fed’s independence (03:02). Gura observes, “You could tell just by his expression [...] this is weighing heavy on the Fed chair's shoulders” (03:44). This segment underscores the delicate balance the Federal Reserve must maintain in a politically charged environment.

Consumer Sentiment and Economic Outlook

Transitioning to consumer behavior, Ryssdal references the University of Michigan’s Consumer Sentiment Index, which has risen to its highest level since April, indicating improving consumer expectations. Kathryn Rampell elaborates, “Consumers have been looking forward to the resolution of this election for some time. Of course, still quite a bit of uncertainty remains” (10:02). The discussion highlights that despite ongoing concerns about inflation, rising wages and robust GDP growth contribute to a more optimistic economic outlook. Ryssdal notes the positive trends: “Wage growth above inflation [...] GDP growth pretty robust, unemployment ticking up, but still quite low” (05:55).

Innovative Energy Management in Texas

The podcast then shifts focus to energy infrastructure, specifically Texas’s new virtual power plant initiative designed to stabilize electricity bills for consumers. Elizabeth Troval reports on how the system optimizes energy usage by adjusting thermostat settings during peak pricing hours. Renew Home CEO Ben Brown explains, “We can just start making it legal to build more types of homes in more places” (24:20), illustrating how technological innovations can contribute to broader economic solutions, including housing.

Market Updates

Ryssdal provides a brief overview of the stock market, noting significant gains for the Dow Industrial, Nasdaq, and S&P 500, along with specific company performances such as Axon Enterprises and Geo Group. This segment sets the stage for understanding the broader economic environment in which housing policies are being debated (13:45).

Agricultural Challenges Under Political Shifts

An interview with April Hemmes, a corn and soybean farmer in Iowa, sheds light on the agricultural sector's vulnerabilities amid changing administrations. Hemmes expresses concern over potential tariffs and their impact on exports, particularly to China and Mexico. She remarks, “[...] the soybeans went up, and I have to go a little bit farther. We had a USDA report come out today, and they lowered the yields” (19:56), indicating how policy decisions directly affect farming operations. Hemmes underscores the precarious nature of agriculture, stating, “I am still optimistic” despite facing significant challenges (22:34).

Addressing the Housing Shortage: Expert Solutions

The core of the episode focuses on the housing shortage, a pressing issue with an estimated deficit of 3 to 7 million housing units. Marketplace housing correspondent Amy Scott presents five expert-recommended solutions through a creative audio listicle format, featuring insights from policy director David Garcia of Up for Growth and other industry leaders.

1. Zoning Reforms to Increase Housing Diversity (24:20): David Garcia emphasizes the necessity of altering zoning laws to permit a broader range of housing types, such as apartments, duplexes, and accessory dwelling units. He points out that restrictive zoning for single-family homes limits supply and contributes to the shortage. “Most of the residential land in this country is zoned for detached single family houses,” Garcia explains (24:20).

2. Incentivizing Zoning Reforms Through Federal Funding (25:09): Lisa Rice, CEO of the National Fair Housing Alliance, suggests tying federal funding for housing, community development, transportation, and disaster relief to the adoption of zoning reforms. This approach would motivate local officials to prioritize affordable housing initiatives by making compliance financially advantageous. Rice contends, “[...] Congress could say things like, look, if you're a community that is building your fair share of affordable housing, when we have a disaster, you're first in line” (25:24).

3. Cutting Tariffs on Canadian Lumber to Reduce Construction Costs (25:57): Saleem Firth from the Mercatus Center advocates for eliminating tariffs on Canadian lumber, which currently inflates the costs of building new homes. Firth argues that since there is no security trade-off with Canada, removing these tariffs would significantly lower construction expenses and accelerate housing development. “There is a [spillover] massive in terms of the cost to constructing new houses,” he states (25:57).

4. Moratorium on Capital Gains Tax for Sellers to First-Time Homebuyers (26:38): Laura O'Connor, a real estate industry consultant, proposes suspending capital gains taxes for property investors who sell homes to first-time buyers. This would incentivize the release of available housing stock by reducing the financial burden on sellers, thus increasing the availability of homes for new entrants to the market. O'Connor notes, “If Congress suspended that tax for a year or two, we can help spur... [the] property over and allowing it to become something that feeds that entry level buyer” (26:38).

5. Tax Credits for Converting Unused Office Space into Residential Units (27:42): Reid Hunt, CEO of the Coalition for Green Capital, recommends offering tax credits to developers who repurpose unused office buildings into residential spaces. By monetizing these credits upon occupancy, the policy ensures that conversions are market-driven and timely, thereby expanding the housing supply efficiently. Hunt explains, “Let’s have the tax credit be monetized when the person moves in. That way, they'll be pricing to the market” (27:42).

Scott summarizes the consensus among experts that no single solution will resolve the housing shortage. Instead, a combination of zoning reforms, financial incentives, and policy adjustments is necessary to address the complex issue comprehensively. She acknowledges the potential downsides, such as the cost of tax incentives and the impact on existing housing markets, but maintains that a multifaceted approach is essential for meaningful progress (28:07).

Closing Remarks

In the concluding segment, Ryssdal reflects on the broader economic landscape, mentioning Tesla’s market valuation as a testament to the dynamic nature of the economy and its key players. He underscores the interconnectedness of various sectors and policies discussed throughout the episode, reinforcing the notion that addressing systemic issues like the housing shortage requires coordinated efforts across multiple domains (28:54).

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Notable Quotes:

• Kai Ryssdal: “We are short somewhere between 3 and 7 million housing units.” (23:30)
• David Garcia: “Most of the residential land in this country is zoned for detached single family houses.” (24:20)
• Lisa Rice: “If you're a community that is building your fair share of affordable housing, when we have a disaster, you're first in line.” (25:24)
• Saleem Firth: “There is a spillover massive in terms of the cost to constructing new houses.” (25:57)
• Laura O'Connor: “If Congress suspended that tax for a year or two, we can help spur... [the] property over and allowing it to become something that feeds that entry level buyer.” (26:38)
• Reid Hunt: “Let’s have the tax credit be monetized when the person moves in. That way, they'll be pricing to the market.” (27:42)

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This episode of Marketplace provides an in-depth exploration of the housing shortage, highlighting expert-driven solutions that span legislative reforms, economic incentives, and innovative market strategies. Ryssdal effectively ties these discussions into the broader economic context, offering listeners a comprehensive understanding of the challenges and potential pathways to a more robust and accessible housing market.

Transcript

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[Kai Rysdal]

Well, that was a week, huh? From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Friday today. This one is November 8th. Good as always to have you along, everybody. We have so very much to talk about. Never enough time. David Gura is at Bloomberg. Kathryn Rampel is at the Washington Post. Hey, you two.

[David Gura]

Hey, Kai.

[Kai Rysdal]

So, Catherine, let me begin with you and this observation, and I suppose, you know, we'll point out that there was a Fed meeting and blah, blah, blah, quarter, percentage point, all that stuff that's been in the news. We are in a place now, Ms. Rampel, where inflationary fiscal policy from the Trump administration and a new Congress is going to run headlong into a monetary policy regime that is loosening and therein be dragons.

[Kathryn Rampell]

Yes, yes. Well, Powell, the Fed chair, was very disciplined about not commenting on what the next administration will do and basically said, you know, they don't want to speculate. And it's worth noting that when Trump was waging trade wars before, I believe the Fed continued cutting rates for a while. So because there were, you know, tariffs have multiple effects, one is to raise prices, but another is potentially to slow growth. So it can cut both ways. I do think it's going to be a real challenge in the next couple of years to manage, you know, to have this sort of push pull between fiscal policy, not just tariffs, but unfunded tax cuts, among other things, and monetary policy, that they may not be working in the same direction. And we could be setting ourselves up for something of a showdown depending on how much political independence the Federal Reserve retains, which is another.

[Kai Rysdal]

Hang on, you're skipping ahead in the interview, Kathryn. You're skipping ahead. Cut it out, David. It has to be. You know, Catherine said Powell was disciplined, but one does not have to try too hard to read between the lines, to understand that this is going to be a challenge in running this economy.

[David Gura]

There were some odd vibes at that press conference yesterday. And when he was asked about politics, he was really reticent to engage with those questions. When he was asked about the economy, he was happy to expound at length on what the Fed had done and sort of, to an extent, what it's thinking. But, you know, this is something that you've pointed out many times that the pressure on Jay Powell is going to get more and more extreme. And there was that very intense Q and A with Victoria Guida of Politico where she said to him, if the incoming president asks you to resign, all.

[Kai Rysdal]

My questions, but go ahead.

[David Gura]

Oh, my God, I'm sorry.

[Kai Rysdal]

No, go, go ahead. Since you're on it. Go ahead.

[David Gura]

Yeah. Would you resign if he asked you to? And he emphatically said no. Quickly said no. And then she asked him to expound upon that. Would it be legal? No, he said as well. And then they moved on. It was kind of a remarkable moment, but this was a Jay Powell in that moment, who looked like it was the last thing he wanted to talk about. But you could tell just by his expression, the way he was comporting himself, this is weighing heavy on the Fed chair's shoulders.

[Kai Rysdal]

So, Catherine, since you two have taken control of this interview, I'm gonna keep. I'm gonna keep going with whatever it is you guys want to talk about. There was a follow up, actually, to that no, I'm not gonna resign question in which Powell said not. He was asked, you know, not permitted under the law. It sounds a lot like he's saying, I don't want to put words in his mouth, but you know what I mean. See you in court. Right.

[Kathryn Rampell]

I think the hope is that the confrontation won't. If there is to be one in which Trump is unhappy with Fed policy, it may not happen for a while. Right, because right now the economy's doing quite well. And in fact, the Fed is cutting rates, which is exactly what Trump wants. That's not why they're doing it, obviously, but it happens to be consistent with his desired outcomes. Maybe Trump will get into office and realize his great fortune that even though he's been poo pooing this economy for quite a while, he's actually inheriting a lot of really good trends. Wage growth above inflation for over a year now, GDP growth pretty robust, unemployment ticking up, but still quite low. And maybe if he's wise, he'll just lay off of the Fed. Now, that doesn't mean their interests will always be aligned or their desired outcomes will always be aligned. His, his and the Feds. And I don't know what's going to happen then. There have been signals out of Trump world that Trump may not outright try to fire Jay Powell, but may do some other things to try to undermine the credibility, the credible independence of the Federal Reserve. And, you know, I really hope it doesn't come to that, but I think it is quite possible.

[Kai Rysdal]

David, let's keep going with this. And just because you and I had this exchange in a separate communication, talk to me about that whole shack shadow Fed chair thing that has been floated and number one, what it is, and number two, what it might mean.

[David Gura]

Yeah. Count that among what Catherine was just talking about, the ways to undermine the independence of the Fed. So I think what's been proposed by an economic adviser to Donald Trump now, the President elect, is to have this shadow Fed, somebody who would be telegraphing what he thinks the Fed should be doing while waiting in the wings, I assume to be nominated by the incoming president to replace Jay Powell. Now, if he serves out his term, that takes us to 2026. So it would be for a while. But I think that that level of engagement in that way would be confusing, to say the least. And I think that it would sort of undermine how most Americans understand what the Fed is doing and indeed is supposed to be doing.

[Kai Rysdal]

Catherine, you were facetious, I think, this morning when you pointed out that really the smartest thing that the President elect could do would be to get into office on day one, claim credit for the economy, and then basically go golfing.

[Kathryn Rampell]

I mean, I'm not being totally facetious. I actually do think that's the best possible outcome we can hope for. As I just said, economic trends have been quite good. You know, there's consumers don't necessarily acknowledge it in part because I think they're still feeling this hangover from inflation of 2022, 2023. But at some point, I think they're going to realize that their wages have been outpacing price growth. And kind of what the economy needs is a hype man. You know, you want Trump to go in, take credit for all of these. You know, suddenly he wakes up and recognizes that all of these good things are happening in the economy that I just ticked off and say, victory, I fixed it. The economy is great. Everybody should feel great about it. And that would be the best possible outcome, because the things he would actually do that he's proposed doing rather to, quote, unquote, fix the economy would be economically very painful. So we talked about politicizing the Fed. I'm very worried about that. But there's also the universal tariffs. There's also the mass deportations, which are likely to cause all sorts, besides the sort of humanitarian concerns. For all of that, it's going to cause all sorts of problems with the economy and the labor force. So there are a lot of interventions that he would like to do to, quote, unquote, fix the economy or fix the country in some other respect that would actually have the opposite effect. And you can see that in the markets. You can see that a lot of Wall street economists have revised upward their inflation expectations, downward their growth expectations, etc.

[Kai Rysdal]

David Gurra, I'm going to give you the last word and I'm not going to steal your line. What's going to happen in this next administration? We were just talking about it.

[David Gura]

Maybe the stock market will be the economy.

[Kai Rysdal]

Ba dum boom. David Gurra at Bloomberg. Katherine pelt, the Washington Post we'll be here all week, folks. See you two later.

[Mitchell Hartman]

Thank you, Kyle.

[Kai Rysdal]

A strong week on Wall street ends with a strong day. We'll have the details when we do the numbers. You want to know what's really going on in this economy, you gotta check with consumers, which the University of Michigan helpfully does for us every single month. Their Consumer Sentiment Index, how we all are feeling about the economy, the prices we're paying, the income we are earning to pay those prices that came out this morning and it shut up heading into early November, rising for the fourth month in a row to the highest it's been since April. And consumer expectations of future economic conditions are at their highest point in more than three years, in other words, before inflation did its worst. Marketplace's Mitchell Hartman reports on those improving consumer attitudes and whether they're likely to last.

[Sponsor Voice]

First, it's important to note the most recent University of Michigan survey was done before the election, says director Joanne Hsu.

[Kathryn Rampell]

Consumers have been looking forward to the resolution of this election for some time. Of course, still quite a bit of uncertainty remains.

[Sponsor Voice]

What we do know is leading up to the election, Americans have been getting steadily more positive for purely economic reasons.

[Kathryn Rampell]

It's the moderation in inflation expectations, the strengthening in income expectations and continued belief.

[Elizabeth Troval]

That business conditions will improve in the year ahead.

[Sponsor Voice]

In fact, the conference board, which also reported a big improvement in consumer confidence before the election, finds that most Americans don't think which political leader is in power has a major impact on their economic lives. Chief economist Dana Peterson says when surveyors ask consumers what does two words continue.

[Mitchell Hartman]

To be the biggest in the word cloud, and that's prices and inflation. Consumers are still preoccupied with the fact that prices are much higher than pre pandemic. Still, says Peterson, it hasn't stopped them from spending. Even after stimulus checks ran out, they were still working and they had money coming in.

[Sponsor Voice]

And lately, consumers have been cheered by lower gas prices, down about 10% nationwide since last year and likely to dip below $3 a gallon soon, says Andrew Gross at AAA. For this Thanksgiving going to be really low, he says. That'll leave consumers with a bit more to spend for the holidays. I'm Mitchell Hartman for Marketplace.

[Kai Rysdal]

Much has been said and written about the power grid in Texas. You remember those blackouts after that big ice storm a couple of years ago, surging air conditioning demand in those hot Texas summers. Now, though, hundreds of thousands of Texans are going to have a chance to save on their electricity bills thanks to a new virtual power plant that's going to be in place next spring. Virtual power plants don't actually generate power, of course. They optimize it. From Houston, Marketplace's Elizabeth Troval explains, Imagine.

[Ben Brown]

You keep your house at 69 degrees on a hot day, says Renew Home CEO Ben Brown.

[Kai Rysdal]

Power prices could go up 30%, 50%, 100% within a given hour.

[Ben Brown]

His company's new virtual power plant in Texas would have a smart thermostat. Cool your house to 68 degrees at the top of the hour when prices.

[Kai Rysdal]

Are lower, and then in the second.

[Sponsor Voice]

Half of the hour when electricity prices.

[Kai Rysdal]

Spiked by double, let it rise up to 69 degrees. That is a perfect example of how you're saving customers money, but also the grid itself, he says.

[Ben Brown]

Those energy savings add up when you multiply them by thousands of customers. Energy consulting Hilton Doug Lewin says this project helps shift demand around so we can get more out of the electricity we're already producing rather than just curtailing.

[Sponsor Voice]

It, which happens a lot now. We literally just let power go to.

[Ben Brown]

Waste and we have that extra electricity because of the nature of renewables. The sun is shining and the wind is blowing, whether we use that energy or not. Karen Palmer is with Resources for the Future.

[Kai Rysdal]

Those are resources where the supply of electricity doesn't necessarily come when people are demanding it. But if you provide incentives, you can.

[Ben Brown]

Switch incentives like a cheaper energy bill, which is what consumers can get if they move their energy usage away from peak times. I'm Elizabeth Troval for Marketplace.

[Sponsor Voice]

Coming up, we can just start making it legal to build more types of homes in more places.

[Kai Rysdal]

Oh, okay. First though, let's do the numbers. Dow Industrial is up 259 on this Friday, six tenths percent, 43,988. The Nasdaq added 17 points, about a tenth percent. 19,286 the S&P 500 up 22.4%, 59 and 95 for the five days gone by, the Dow up 4.6%. The Nasdaq surged five and three quarters percent. The S&P 500 grew about four and seven tenths percent. Axon Enterprises up 28.7% today. The company manufactures Tasers, body cameras, drones and other law enforcement gear. Geo Group, which owns, leases and manages correctional facilities, expanded 3.8% today. Bonds up yield down 10 years at 4.30%. You're listening to Marketplace.

[Sponsor Voice]

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[Mitchell Hartman]

Or.

[Sponsor Voice]

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[Kai Rysdal]

This is Marketplace. I'm Kai Rysdal. One of the principles of this program is that economic headlines are all well and good, but they just don't matter if people aren't feeling it in their day to day. That is part of what happened on Tuesday. One of the headlines about the economy to come in a second Trump administration is tariffs. We've been talking about that a lot this week and now we're going to talk about it with somebody who definitely feels it in their day to day. April Hemmes is our corn and soybean farmer in Iowa. I caught her just as she was setting up for our interview this morning.

[Mitchell Hartman]

All right, new recording. There we go.

[Kai Rysdal]

New recording. There we go. It's like we don't even have to tell you what to do anymore. April Hemis.

[Mitchell Hartman]

I know. Hey. Hey, buddy. Have you had anything to talk about this week?

[Kai Rysdal]

It's been kind of empty this week. You liar. Oh, my goodness. So.

[Mitchell Hartman]

What a wild ride.

[Kai Rysdal]

What a week. I want to start first of all by asking the same question I usually do, which is how's business? Except I want to ask you how you think business is going to be for you with the change in administrations. What do you think?

[Mitchell Hartman]

Here's what I said. Here's what I said to people before. Ag is screwed no matter who gets in there. Can I say that on public radio? Yes, you can. Okay. Because, you know, this administration has done very little for trade and agriculture and the new administration.

[Kai Rysdal]

This administration? You mean the Biden administration.

[Mitchell Hartman]

The Biden administration, yeah. We haven't had any new trade agreements and ag has been screaming for them. And then we also know now what the Trump administration is going to do, which has us running scared because, you know, half of our, over half of our soybeans are exported to China. Corn. Our biggest trading partner is Mexico. And quite honestly, I have all John Deere equipment. And if he, if he puts a tariff of 200% on John Deere parts coming from Mexico or anywhere else, you know, farmers are going to be in a World of hurt more than we are. But being. Market just came in and beans are up $4. That's unbelievable.

[Kai Rysdal]

So explain. Explain that to a layperson. I don't know what that means.

[Mitchell Hartman]

I don't either, because. So evidently they're, you know, the stock market reacted and now the soybeans. But the. The soybeans went up, and I have to go a little bit farther. We had a USDA report come out today, and they lowered the yields. So that's my interpretation of why the markets went up.

[Kai Rysdal]

Right. It seems like every time we talk to you, you are jetting off to one international conference about agriculture or another. Yes. Number one, what are your travel plans? But number two, what do you expect your counterparts either in China. I know you were there. You go to Europe and the Middle east sometimes. What do you expect them to be saying to you?

[Mitchell Hartman]

Well, here's something that happened just last week. They were at the China International Expo, which is a half a million people. All the people China trades with and the soybean people. Last year went. Met with all the Chinese government officials. This year, USDA wanted to set up the meetings, and the Chinese wouldn't accept meetings with them.

[Kai Rysdal]

Really.

[Mitchell Hartman]

So that tells you. And then I got a text from the United Soybean Board chairman who was there, and they said, yeah, they just announced, buckle up. It's going to be a fun ride.

[Kai Rysdal]

Wow.

[Mitchell Hartman]

There you have it. Yeah, that's fun.

[Kai Rysdal]

We. Well, all right, two more, and then I'll let you get back to work. Number one, have you harvested yet? It's November, right? You've already had your harvest, right?

[Mitchell Hartman]

Yes.

[Kai Rysdal]

Okay.

[Mitchell Hartman]

Yep, I'm done. And last year, if you remember, I had, like, one of the best harvests I've ever had. This year was the worst harvest I've ever had. Yes. And so my husband goes, it's not the worst. And I go, maybe not, but it's the worst since I've been able to glean all the information off of every acre. You know, have the technology to do that. So that's why we have crop insurance.

[Kai Rysdal]

Remember?

[Mitchell Hartman]

I always say that.

[Kai Rysdal]

Yeah, no, totally. What happened? Was it, like, too dry or what? I mean, how could.

[Mitchell Hartman]

It was too dry, so it was too wet early. So some spots drowned it out, but not much. And then it just shut off. You know, there was just no rain, and I'd been in a drought for four years. So I said, this is going to catch up to me someday, and we're all hurting in my little part of the world here.

[Kai Rysdal]

So that Gets me to the last question I have for you. And it kind of goes like this. You know, we've been talking, I don't know, five, six, seven, eight years, whatever, and we've talked a couple of times about how tough agriculture is and how you guys are at the mercy of the weather and, you know, you're price takers, not price makers. You're at the mercy of the market and you always are resilient as all get out. And are you still feeling that?

[Mitchell Hartman]

Yeah, I am. Okay, all right, well, you almost have to be because like I said, I've been doing this 39 years. It'll come back and you take your profits while you can. And fortunately I'm old, er, and your age, I know more experience there, I'm a more experienced farmer and I have got a lot of things paid off. So I'm lucky that way. You know, we've been farming this ground for over 125 years and we made it this far. So it's just like any business, you know, you watch your expenses. So, yes, I'm. Yes, Kai, I'm still optimistic.

[Kai Rysdal]

All right, well, hang in there. We'll talk to you soon.

[Mitchell Hartman]

All right, thanks.

[Kai Rysdal]

Bye.

[Mitchell Hartman]

Bye.

[Kai Rysdal]

We do not have enough housing in this economy. That is the straight up fact with which we begin the setup for this next story. The unknown is what, if anything, Presidents Elect Trump and the new Congress might decide to do about that fact. Depending on who you ask. We are short somewhere between 3 and 7 million housing units. There are a lot of potential solutions at the local, state and federal level. So many solutions, in fact, that our housing correspondent Amy Scott has been asking experts for their favorite ideas, which she has put into this handy dandy audio listicle.

[David Garcia]

You know, doing a list on the radio is kind of hard. So when you hear this doorbell, that's a new idea. Ready solution number one to the housing crisis.

[Sponsor Voice]

We can just start making it legal to build more types of homes in more places.

[David Garcia]

David Garcia is policy director at up for Growth, a pro housing advocacy group. Most of the residential land in this country is zoned for detached single family houses. And minimum lot size and square footage requirements and height limits make it really hard to build anything else. Garcia says just allowing more apartments and duplexes and those backyard cottages known as accessory dwelling units would make a big difference.

[Sponsor Voice]

So that is one thing that can be done that can unlock a supply of a really popular type of housing that doesn't cost any money. It is really just a change either that a city itself can make or the state legislature can make.

[David Garcia]

But many homeowners and their elected officials are resistant to zoning reforms that might change their neighborhoods. Which brings us to our second solution from Lisa Rice, CEO of the National.

[Mitchell Hartman]

Fair Housing alliance, incentivizing zoning reform.

[David Garcia]

Rice says tying federal money for housing and community development, transportation, even disaster relief to zoning reform could motivate officials to do more.

[Mitchell Hartman]

Congress could say things like, look, if you're a community that is building your fair share of affordable housing, when we have a disaster, you're first in line. But if you've got all these exclusionary zoning policies, you can foot your own bill for certain.

[David Garcia]

All right, Solution number three to the housing shortage. Cut tariffs on Canadian lumber.

[Sponsor Voice]

We're adding thousands to the cost of framing a new house because of a tiff with our closest ally.

[David Garcia]

This is Saleem Firth with the Mercatus Center, a free market oriented think tank at George Mason University.

[Sponsor Voice]

I understand the idea of being protectionist towards China and that, you know, free trade is traded off against security. There's no security trade off with Canada. And the spillover is massive in terms of the cost to constructing new houses.

[David Garcia]

Now, housing solution number four would help more people become homeowners.

[Kathryn Rampell]

A moratorium on capital gains tax for investors who are selling to first time home buyers.

[David Garcia]

This one comes from Laura O'Connor, a real estate industry consultant. She says, though we hear a lot about big institutional investors buying up single family homes, most are owned by smaller landlords with fewer than 10 properties. And a lot of them may not even want to be landlords.

[Kathryn Rampell]

There's a significant number of investors today that are accidental. They inherited a home, they don't know what to do with it.

[David Garcia]

But if they sell that home, their tax bill could be 15 or 20% of the proceeds. If Congress suspended that tax for a year or two, we can help spur.

[Kathryn Rampell]

Them towards turning that property over and allowing it to become something that feeds that entry level buyer.

[David Garcia]

Finally, number five comes from Reid Hunt, CEO of the Coalition for Green Capital.

[Sponsor Voice]

Allow office building owners to put all of this unused space into the market as residential. This is very well understood, but it's not cheap.

[David Garcia]

To make it more appealing, Hunt suggests creating a tax credit for developers who convert office space into housing. That kicks in when it's occupied. And the more quickly that happens, the bigger the credit.

[Sponsor Voice]

Let's not let people rebuild only for the high end and then wait a long time for the occupant. Let's have the tax credit be monetized when the person moves in. That way, they'll be pricing to the market.

[David Garcia]

Each of these solutions has potential downsides. Tax credits and incentives cost money. Cutting tariffs on Canadian lumber could hurt US Producers. Freeing up more housing for homeownership could take away much needed rental housing. But all the experts I talk to agree there's no single fix to the housing shortage. It's going to take all the fixes. I'm Amy Scott for Marketplace.

[Kai Rysdal]

This final note on the way out today. Tesla is, as of the close on Wall street this afternoon, worth a cool trillion American dollar. Shares are up 29% since the events of Tuesday. The CEO of that company, of course, a key donor and close advisor to the president elect. Tesla is now worth about 16 and a half. General Motors is GM sells more than 6 million cars a year. Tesla not quite 2 million. Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargoli. Donna Tam is the executive editor. Neal Scarborough is vice president and general manager. I'm Kai Rysdal. Have yourselves a great weekend, everybody. We'll see you back here on Monday. All right, this is apm.

[Mitchell Hartman]

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