Just last week, John Lovallo—UBS’s top homebuilders analyst—was a guest on CNBC’s financial show ‘The Exchange.’ He touched on the acute challenges that continue to hamper this housing market recovery. During his time on the Hill, Lovallo focused on the bottlenecks that are slowing down homebuilders at local and municipal levels. He discussed a number of possible answers to unstick the housing market, too.
Lovallo pointed out that these bottlenecks are mostly due to regulatory bottlenecks and supply chain constraints. He said it’s often local governments who use their own permitting powers to create logjams that slow down prospective construction projects. At the same time, supply chain disruptions are leading to intensifying challenges for builders themselves. For this reason, they often have a hard time accessing the materials they need when they need them. This perfect — or rather, horrific — storm of factors has resulted in often devastating delays and skyrocketing home building costs.
In the course of the discussion, Lovallo took a look at what the clear fix is to all these challenges affecting our market affordability. He stated that while various strategies could potentially alleviate some of the pressures, no single approach would completely resolve the complexities involved. Instead, Lovallo advocated for a collaborative effort among stakeholders, including government officials, builders, and community members, to identify practical solutions tailored to specific local conditions.
He championed simplifying permitting processes and increasing transparency in local governments. By reducing bureaucratic red tape, Lovallo believes that homebuilders could expedite construction timelines and ultimately provide more housing options to consumers.
Besides making more chips, Lovallo emphasized that tackling supply chain constraints is just as important. He argued that finding new sourcing strategies and building up local production capacity would be the best ways to avoid such delays. These small endeavors will do much more than help homebuilders — they will make a much more stable housing market for everyone.
Lovallo’s perspective comes at the perfect time as the housing market continues to be a hot bed of controversy. Escalating home prices and constricted inventory are stoking fears. As prospective homebuyers struggle to find affordable options, experts like Lovallo are advocating for changes that could foster a healthier housing environment.