My Facebook friend and occasional WCD contributor David Belman recently went to Washington DC to discuss the housing situation not only here in Wisconsin but across the country. I’ve asked him some basic questions. First, why isn’t the free market working? Secondly, why aren’t builders and entrepreneurs addressing the rental shortage across the state (I’m intimately familiar with Southeast Wisconsin, where I live). Mr. Belman was gracious enough to share his thoughts on his visit to Washington. Read below.
Here are some general thoughts about the housing market based on my recent visit to Washington D.C. For context I was there for the National Association of Home Builders (NAHB) meetings and also spent a full day on capitol hill meeting with our congressional and members of the senate to talk about housing.
Home prices are continuing to rise mainly due to supply and demand issues. The issue is really prevalent in the homes under the $500,000 price point where there are more buyers than sellers.
Currently in Waukesha county there are about 3.4 months of inventory on the market. Existing homes are about 2.8 months of supply whereas new homes are at an 8-month supply. An aggregate 6 months’ supply of homes is considered a healthy market. So, it is clearly a sellers’ market.
Unfortunately, new construction homes cannot touch that price point.
The average new home in Waukesha county starts around $700,000. There are not that many buyers out there at that price point. The ones that can also are able to afford $1,000,000 homes and then they choose to spend more and get exactly what they want.
Why can’t new construction homes reach that price point?
Cost of Land- The average lot in Waukesha county is selling for $217,000 from the data from 2024
Regulations-The cost of regulations added to a home due to local, state and federal regulations are $93,870 per a recent NAHB study.
Loans- The rates staying around 7% have prevented a lot of potential buyers from moving forward. Why lose your 3% loan. Inflation is down but the FED doesn’t want to give Trump a win and they are holding off on needed rate cuts.
Labor- The labor shortage is real. There are over 220,000 unfilled jobs in the construction sector. NAHB just did a study that shows that it accounts for 19,000 less homes being built per year due to lack of labor.
Ok so that’s the market dynamic. Now on to what we are trying to accomplish in D.C.
Over 1000 builders and associates visited our representatives on 6/11/25 at the Capital.
We primarily talked about the following 4 issues.
- Preventing HUD from requiring homes to be built with IECC 2021 codes for their financing. HUD financing is for affordable homes. Using the IECC 2021 code will add $30,000 to the cost of a typical home. This makes zero sense and is another leftover power grab from the Biden administration.
- Keep funding Job Corps. Job Corps is a federal program that provides funding for training to a variety of industries. While it has not always been utilized properly in some industries it has been put to excellent use in the construction industry. The majority of that funding goes towards the Home Builders Institute (HBI). It is a specific skilled trades training program that is set up all around the country and helps high schools, veterans, and even reformed prison inmates learn job ready skills such as plumbing, electric, carpentry, HVAC, roofing, siding, etc. The funding was slashed last week, there was an injunction and it’s in the courts right now.
- Support the Big Beautiful Bill. Overall locking in the 2017 Tax Cuts and Jobs act tax savings will be a huge benefit to the construction industry as it creates financial certainty. People don’t make purchases during uncertain times. Secondly the no tax on overtime is a huge benefit for the construction industry. If we can’t hire people, then if they are incentivized to stay on the jobsite longer by not paying additional tax we can solve some of the labor issues. Our major issue with the bill is the sudden removal of the energy efficient tax credits. Cutting off the funding to Energy Star and Focus on Energy rebates by 2025 could be burdensome to many people building a home as these could sunset before their home is completed. They also want to remove the 30% solar credits. (personally I don’t care about those but many do rely on those. Again, it’s all about cutting spending and we prefer the tax cuts over some energy credits at the end of the day)
- De-regulation. We support federal de-regulation at all levels. We are encouraged by what the EPA is looking at doing and we need to replicate those efforts at all federal agencies. The NAHB recently wrote a paper on suggested de-regulations on housing. It is a huge document that I have not read through yet but here is the link: https://www.nahb.org/-/media/NAHB/advocacy/docs/industry-issues/federal-regulatory-reform/omb-deregulatory-recommendations-051225.pdf?rev=38f05c377b174007b2617a52b86ffdd8&hash=5224615CF882A27CBBD262E91DF1AB32
Overall, this was one of the first times where we have had visits where our representatives were very serious about housing affordability issues and I even had one ask me to send them a list of the de-regulations wants so they could quote: “Get to work on them right away.”
I can also talk a bit about tariffs and how they have not really been an issue with pricing but have scared the consumer… David Belman – Belman Homes
In a subsequent phone interview, I asked Mr. Belman about the shortage of rental units, smaller homes for empty nesters that no longer need 4 bedrooms and 2 ½ baths, and what the entry level wages are in the construction industry.
Mr. Belman again cited local hurdles and red tape as the main barrier for larger apartment projects, along with demands for exorbitant amounts of bonding. Codes for new homes such as set-backs, street dimensions and square footage requirements (again, mainly by local municipalities) eliminates the construction of smaller homes. Note: I had asked about building homes for empty nesters that didn’t need 4 bedrooms and 2 ½ baths. Lastly, entry level construction jobs can start up to $50K and they only go up from there.
Conclusion: I’ve been asking the question of why the free market isn’t working when it comes to affordable housing, and the clear answer is that the market isn’t free. Government regulation at all levels of government has made the housing industry practically unworkable. Of course, the government solution to too much government is more government.
Listen to the Podcast Re-Thinking Developments with Carl Harris NAHB Chairman – For some eye-opening perspective!
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