Georgia is short roughly 60,000 housing units, and the debate over who's to blame has dragged on for years. At the Georgia Chamber of Commerce Foundation Trustees Luncheon on Thursday, April 16, in Atlanta, GMA Executive Director Larry Hanson and Brad Mock, CEO of the Georgia Association of Realtors (GAR), took on the issue by rejecting the easy answers.
Before Hanson and Mock addressed affordability, GMA's Noah Roenitz and GAR’s Betsy Bradfield outlined ongoing collaboration between the two organizations. Both are part of the Housing Access and Affordability Task Force, a coalition built on the premise that the problem is bigger than any one group can address. Their current focus is a housing toolkit designed to give local governments practical, real-world guidance.
A Problem With Too Many Easy Answers
Mock said the two most common targets in the housing debate are also the most convenient ones. "Villains are institutional investors. Interest rates are high. Those are layups," he said. "Your kids, your grandkids…could have told you that from Twitter." Nationally, institutional investors hold roughly four percent of the housing market. In Georgia the number is higher, and it's higher still in metro Atlanta. Interest rates, he noted, are historically low over a 25-year window despite recent increases. "All those are costs on top of something," Mock said.
Hanson framed the problem around what he calls the five L's: land, lending, lumber and materials, labor, and laws. Local governments control exactly one of them. Land prices are set by the market. Lending rates are set by the Federal Reserve. Material and labor costs have their own dynamics. That leaves local zoning codes, development regulations, and approval processes as the only thing local leaders can address. "We feel sometimes we're being attacked to fix the whole problem by less regulation," Hanson said.
He put numbers to the lending piece. A buyer purchasing a $400,000 home with 20 percent down at today's mortgage rates pays $650 more per month than a buyer would have at 2021 rates, $234,000 more over 30 years. No zoning reform touches that. "That prevents young people from being able to [purchase a home]...they do the math, they know what they can afford," Hanson said. "That's the affordability issue."
What Cities Are Doing
Hanson had no shortage of examples of how cities are addressing housing challenges.
Rome appointed a community housing task force and directed a million dollars each toward developer incentives and its land bank authority. Fitzgerald partnered with private builders to redevelop 700 blighted properties. Macon has broken ground on a 64-unit development. Gainesville approved 65 mixed-use income units. Braselton has added 10,000 residents and 4,000 homes since 2000, cutting minimum lot sizes along the way.
In just the past few weeks:
- Thomaston approved a rezoning to increase density on a previously approved development and placed a short-term moratorium on new approvals while it reviews its entire zoning code.
- Athens-Clarke advanced workforce housing and formed a study committee on land use regulations.
- Fayetteville held a town hall on growth and housing as it begins updating its comprehensive plan.
- Savannah ran a 15-stop community tour on housing and zoning.
- LaGrange, Alpharetta, Milton, Peachtree Corners, Vidalia, Statesboro, Augusta, and Braselton all took steps forward in recent weeks.
"It's not as if things are not being done," Hanson said.
Mock singled out two cities. In Newnan, builders who stay within a defined percentage of the surrounding neighborhood's average square footage, height, and exterior materials move through approval quickly. Thomaston has built a toolkit of roughly 25 pre-approved plan options. "If you'll accept this plan, we're giving you a plan as a city, go for it," Mock said.
The Cost of Building Small
Mock asked everyone in the room to open the calculator app on their phones. At roughly $200 per square foot to build, 1,800 square feet comes to $360,000. At the same rate, a 1,200 square foot house runs $240,000, a $120,000 difference. "When you say you have to build brick or you have to build eighteen hundred square foot, then you're mandating the materials," he said. His preferred fix: a statewide 1,200 square foot by-right minimum for a single family building a single house. "Let one family build one house," he said. "Half an acre, go for it."
Hanson didn't argue with the math, but offered a caution. He told the story of a Georgia city that waived sidewalk, garage, and street-width requirements to lower development costs. Because cars were parked on the street, fire trucks had trouble getting through, and school buses stopped coming because there was no turnaround. Children walked in the street to reach the bus stop because there were no sidewalks. "Sometimes we really don't understand that there is often a reason that you have regulations," Hanson said. "It's for safety. It's to protect people."
Common Ground
In some Atlanta-area communities, institutional investors own 30 percent of the housing stock. Mock wants to tax them differently. Investors above a certain ownership threshold, he argued, shouldn't receive the same 40 percent assessed value treatment as individual homeowners. "You are slamming national huge Wall Street money into a small economy, local economy," he said. "That's different, and we need to treat it differently." Hanson said GMA has pushed for a similar approach, favoring a higher assessment rate as a market disincentive rather than an outright ban.
Both pointed to the 21st Century Road to Housing Act, which is moving in both chambers of Congress with presidential support for the Senate version, as legislation worth watching. "It could be a game changer for housing in this country," Hanson said. GMA and the National League of Cities have both endorsed it.
"When we understand the realtor's perspective or the home builders, and they understand the local governments," Hanson said, "I think we find places that we can work together to make things better."