Solving the housing crisis means building when no one is buying

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In other words, backlogs grow during downturns due to market forces and then persist during good times due to government-imposed building restrictions.

“It’s a chronic problem,” said Mr. Khater. “We have both a market failure and a government failure.”

These failures can both be seen in San Francisco, which has faced decades of housing shortages. When interest rates were low and demand was strong, developers were keen to build but had to obtain the necessary permits and permits for years. Now that the market has turned, some of the projects that survived this process are being canceled because developers can no longer afford to build them.

Michael Covarrubias, Chief Executive of TMG Partners, is a Bay Area residential and commercial real estate developer. Mr Covarrubias said he has two projects he can legally start construction on, with around 800 condominiums. But they’re on furlough due to rising material and financing costs.

“At its core, real estate is a simple business,” said Mr. Covarrubias. “You have to amortize your costs, and it’s getting harder and harder to make the bill work.”

Across the country, the ongoing housing shortage has prompted a number of lawmakers to reconsider an old idea: public housing. In California, Hawaii, Rhode Island, Maryland, and Colorado, legislators have either introduced or passed proposals that allow state and local governments to develop housing for a range of incomes.

“If the government gets into the business of providing housing, we can be that countercyclical supply,” said Alex Lee, a San Jose Democrat and a member of the California State Assembly. That year, Mr. Lee introduced a measure that would have created a new state agency to build mixed-income housing throughout California. It failed in committee, but Mr Lee has vowed to keep pursuing government-built housing.

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