One of the “American dream” pillars is buying a home, an investment where you can lay down roots, raise a family, and create memories. Homeownership is proven to have long-term financial benefits for the purchaser and our overall economy. In 2021, the housing industry contributed over $33 billion to our state’s economic impact, equating to 14.3% of the gross state product.
However, over the past few years, this part of the American dream hasn’t been as easy to achieve.
If you are a real estate agent, you have probably never seen home prices jump as quickly or struggled to find inventory as you have in recent years. If you are a home builder, you are probably trying to keep up with the demand while dealing with inflated construction prices and supply chain backlogs. And if you are a business looking to locate in Kentucky, you are probably thinking about how to recruit workers to Kentucky, knowing housing options are limited.
These examples brought our groups together to work collaboratively to help provide solutions to the current housing crisis we are facing in Kentucky. Not enough homes are available — especially affordable homes —and this poses a significant threat to Kentucky’s overall economic outlook. (And to be clear, this is not just limited to the Commonwealth, but to the entire United States.) But how did we get to this point?
We don’t have to look too far back to find the answer. Simple economics of supply and demand has led us to this point. After the last recession in 2008, supply did not keep up with demand or household formation. In fact, following the Great Recession, fewer new homes were built than at any time over the past 50 years. A low supply of houses and record-low interest rates following the COVID-19 pandemic has gotten us to this point.
Knowing we cannot go back and fix this problem, the question is: How do we improve our situation moving forward? Time is of the essence, as Kentucky has seen record-breaking economic development investments. With major employers like Ford locating huge new projects in the Commonwealth, we must create a favorable environment to recruit workers, including ensuring we have quality housing options.
First, we need to remove unnecessary barriers to building homes. We know with 120 counties in Kentucky, there are layers of burdensome zoning restrictions and regulations that change from community to community —all of which have inflated costs and stalled production. We need policymakers, from the city and county level all the way to our General Assembly and Congress, to continue working together to eliminate excessive red tape and make it easier to build much-needed homes.
All residential construction must adhere to building codes and it’s important that we work with our allied industries to prevent the overreach of building codes that drive up the cost of housing and work towards safe and cost-effective codes.
And while every industry faces workforce shortages, we must act to attract more students to pursue building trades. The need for skilled trade workers has never been higher than it is today. Carpentry, HVAC, electrical, and welding are all housing-related trades that are in high demand. We must do a better job of promoting our innovative skilled trades and trade schools and the exciting (high-paying) opportunities they can provide to Kentuckians.
Though we can’t solve this issue overnight, it is vital that we all work together to find pathways to provide affordable housing options to Kentuckians and those we hope will locate to our Commonwealth to work, live, and raise their families. For the future of Kentucky, it is vital that we all work together to bring the American dream back within reach.
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