Cost of regulation holding back new home sales/construction?

From Seeking Alpha:

Trumponomics In The Housing Market

With the market soaring high on Trumponomics (the belief that Trump’s business experience will fix the country), we should take a look at some of the “unnecessary regulation” that might seem ripe for elimination. Before getting into this, it is important to stress that this is not a political article. This article is going to focus strictly on the impacts regulation has on housing prices and the impact housing prices have on the economy.

This entry was posted in National Real Estate, New Development, Politics. Bookmark the permalink.

17 Responses to Cost of regulation holding back new home sales/construction?

  1. grim says:

    NJ 4th most innovative state in the country? No. 2 in the Northeast behind Mass.

    Here are the Most Innovative States in America in 2016

  2. Lost says:

    Has this guy been talking to pumpkin or reading this blog? Guy explains the demographics at play in pumpkin’s predictions. I’ll say it again, 2020’s will most likely be the biggest boom in our lives.

    Merry Christmas!!

    “One of my father’s goals was to own a house. He’d lost his mother when he was 3 years old and his father when he was 20. Since then, he had been out on his own … renting or staying with whomever would take him in.

    In India, owning a house means you belong to a place. The first thing my father did when he started to earn enough money was to build a house.

    This feeling of belonging through owning a home is part of American culture as well. Every U.S. generation, when it reaches its peak earning years, follows through on this feeling.

    But homeownership is at a 50-year low because of the real estate bubble in the late 2000s and the economic hardship from the financial crisis in 2008.

    However, there’s a secret force — people now in their prime earning years — that will change this. And I believe it’s going to make stocks related to home buying and real estate soar.

    That group is the millennial generation — which is bigger than the baby-boomer generation with 92 million members. The oldest of the millennials turned 34 in 2016, which marks the point when people begin their years of maximum earning power.

    And like every other generation, millennials will spend their money on cars, food, entertainment, etc.

    But one of the biggest purchases they can make — one that will have a huge impact on the overall economy — is to buy a home. In fact, online real estate firm Zillow says that millennials account for 48% of all homes purchased today.

    That’s why U.S. housing starts in October climbed 25.5% — the highest reading since August 2007 and the largest increase since July 1982.

    Playing the Housing Boom

    I believe that betting on millennials buying housing is like shooting fish in a barrel right now. That’s why I’ve been telling you to buy the iShares U.S. Home Construction ETF (NYSE Arca: ITB) in my articles since February.

    The exchange-traded fund (ETF) owns all the big homebuilders such as Lennar and Toll Brothers, as well as shares of retailers Home Depot and Lowe’s, paint company Sherwin-Williams, furniture company Ethan Allen and many others that benefit from increasing home sales.

    Now, if you’d bought this ETF when I first recommended it on February 18, you’d already be up 22% — ahead of the broad market’s gains of 18% over the same time period.

    As strong as the performance of this ETF is right now, many housing-related stocks have done far better. For example, a small-cap home building company Hovnanian (NYSE: HOV) is up nearly 100% in the last two months.

    USG Corporation (NYSE: USG) is another small company that dominates the drywall industry in the U.S. Its shares are up 36% in the last two months. (Note that Warren Buffett’s company Berkshire Hathaway owns 27% of USG.)

    And in my paid service, Profits Unlimited, where I’ve made the millennial generation the second mega trend to focus on, I’m getting ready to recommend a unique, highly profitable stock that I believe is setting up to soar. This company is going to absolutely dominate the mortgage business because of a patented, proprietary system that allows you to apply and get approval for a mortgage in eight minutes.

    The Next Bull Market

    Now, I believe that you’ll beat the bull market by buying the Home Construction ETF I’ve been telling you to buy.

    However, if you want to make life-changing gains that can give you financial freedom, you have to find stocks with the potential to go up 300%, 500%, 1,000% or even more.

    That may seem unimaginable today, but just remember that the last time we had a massive generation coming of age was 1982 with the baby boomers. That generation created a bull market that lasted until 2000 … and generated winners such as Cisco Systems that went up by 40,000%.

    I believe the millennials bull market is going to be bigger … and there are going to be astonishing winners just like Cisco coming in the years ahead.”

  3. Lost says:

    Why would you want to live in jersey? It’s only the fourth most innovative state in the country. Let’s run from these opportunities on the basis of high property taxes. Great advice.

  4. soutwin says:

    Chicago…..fake tears ….fake president …

  5. Fabius Maximus says:

    Moose you forgot a few.

    What I find when I hear people knocking O, is that the metric they measure him against is usually skewed. When he took office, the economy was in free fall. It could have continued a lot further. But the stimulus was pumped in and the Battleship slowly turned and we have grown ever since. Has it been as fast as people liked, maybe not. Has it reached everyone, again probably not. Are the jobs the same quality as 20 years ago, maybe not. Are the boomers staying in the workplace longer, yes probably.

    But we could have been a lot lot worse.

  6. Alex says:

    Headline from June 11 2015 article in

    “NJ ranks in bottom five for growth in state GDP, say new Federal figures.”

  7. Fabius Maximus says:

    Lead article.

    It took me a while to work out what the lead article was going on about. It keeps going on about regulatory burden, but gave no examples. So I am wondering what burden there actually is and how Trump is going to solve it.

    So it seems that the burden is the usual Permits and Zoning. But isn’t that all local and State. How much regulation is there at the Federal level? Surely the only way Trump could impact it, is to standardize the regs at the Fed level. But that would be growing Gvmt, which I though the GOP were against.

    So I put this down as a garbage article either just using Trump for hits. Or a standard Trump line, a great soundbite, but there is no substance underneath.

  8. Brazilian Butt Lift says:


    You’re right – a lousy article about land use regulation made worse by bringing Trump into it.

    Two trends are going on, 1) local land use regulators are making it more difficult and expensive to build homes by imposing higher fees and creating bottlenecks and delays, especially on West Coast and Northeast, and 2) homebuilders are blaming everyone but themselves for the slow comeback intheir businesses, with latest culprits being local regulators and a labor shortage.

    Ironically, Trump policies such as tighter restrictions on immigration and imports would put upward pressure on home prices. Homebuilders had little trouble building twice as many homes 10 years ago with the workers surging north from Mexico and residential building products pouring south from Canada.

  9. 3b says:

    Lost yes it’s just high property taxes. That’s the only thing wrong with n.j.

  10. Lost says:

    “We ask because grousing from business lobbies about California’s economic climate continues unabated. CNBC, which ranks all states according to “60 measures of competitiveness,” placed California way down at No. 32 in its 2016 rankings this week. In his “Rich States, Poor States” ranking for the conservative, pro-business American Legislative Exchange Council, or ALEC, conservative economist Arthur Laffer places California at a dismal 46th in economic outlook for 2016.

    How can these figures be reconciled?

    The most obvious answer is that the business-friendliness and competitiveness rankings are pretty much baloney. They don’t actually examine what makes a state successful; instead, they merely judge its adherence to right-wing economic orthodoxy. Laffer’s rankings are based on states’ devotion to “15 policy variables” as viewed through their top marginal income and corporate tax rates, whether they levy an estate tax (big demerit for doing so), whether they have anti-union right-to-work laws (having them is a plus) and a relatively low minimum wage. One of Laffer’s co-authors, incidentally, Stephen Moore of the Heritage Foundation, is a top economic advisor to Donald Trump. That should give you a clue about what economic policies a President Trump would favor.

    It shouldn’t take much thought to recognize that most of these variables, taken singly or even together, don’t have much to do with whether a state is friendly to business or with its economic outlook. Rather, they’re just conservative shibboleths: low taxes, hostility to labor, etc., etc.

    They ignore factors that may have much more to do with a business owner’s decision to enter or expand in a state. “The last couple of years have strengthened the idea that ‘it’s the industry structure, stupid,’ ” observes Stephen Levy, head of the Palo Alto-based Center for Continuing Study of the California Economy. North Dakota and Wyoming, which are ranked third and fourth, respectively, in Laffer’s reckoning of economic outlook, have both been riding high from the oil boom of the last decade. “It’s not that they were business-friendly, but that they had a resource,” Levy says.

    That’s true, but it’s a double-edged sword and it’s cutting the wrong way at the moment: In 2015, those two states performed the worst on GDP — North Dakota’s economy shrank by an enormous 6.7%, and Wyoming was second worst at a negative 2.9%. If their economic outlooks are good, the only reason might be that they could hardly do any worse.

    Interestingly, the state with the second-best ranking on Laffer’s curve is North Carolina, which may be guilty of the worst self-inflicted wound in the country. That’s its enactment of legislation that discriminates against LGBT individuals. The measure could cost the state $5 billion in federal funds and business investment. Major businesses have put expansion plans on hold, and just Thursday, the NBA pulled its 2017 All-Star Game out of Charlotte, the most high-profile desertion yet.

    “That’s a metaphor for a different look at what business-friendly means,” Levy comments. “Could it be that being a welcoming community is a big positive for business?”

    If Laffer and his colleagues would take their ideological blinkers off, they might notice the flaws in their own methodology. High marginal tax rates, for example, are often an indicator of fiscal responsibility; that’s the case in California, where Gov. Jerry Brown raised taxes to close a budget deficit, placing the state back on the course of fiscal stability after years of Republican knee-jerk tax cutting and debt issuance.

    Laffer could examine his own rankings to discover the folly of his approach. Among the states he ranks above-average in economic outlook are Wisconsin (No. 9) and Kansas (No. 27), both of which have governors who treat the ALEC playbook as scripture. Yet Kansas Gov. Sam Brownback is a walking refutation of Laffer: He’s cut taxes to the bone, leaving the state unable to properly fund its government or schools. Kansas’ economy shrank by 0.8% last year and eked out a worst-in-the-nation 0.4% annual growth rate in 2013 through 2015.

    CNBC’s rankings, which are based on judgments about 10 economic and social variables, demonstrate how list-makers can overemphasize some things and misunderstand others. California ranks 32nd out of 50 in its list of “top states for business”; plainly, it’s not a top state at all in CNBC’s view. California is marked down in such categories as “business friendliness,” a measure of litigation and regulation, in which it ranks 50th; the “cost of doing business” (taxes, wages, and the generosity of government incentives), on which it ranks 49th; and the cost of living. Its advantages include technology and innovation, and access to capital, ranking second in both. That’s Silicon Valley, both as a place and a state of mind.”

  11. Lost says:


    “Yet what do these categories really mean? Some aren’t contributors to the state’s business climate, but artifacts of its business climate. Sure, California is an expensive place to live, but that’s because it’s a desirable place to live. The state with the lowest cost of living is Mississippi, but who wants to live there? Taxes and wages are high in California in part because the state provides lots of services to a very diverse population, including many people who come in because of its opportunities. Yes, there are lots of regulations, but that’s because some of the elements that draw people in, such as its natural beauty, need protection so they don’t lose their appeal. “

  12. grim says:

    Government regulates the distance between a shitter and a wall, just saying.

    Last year NJ was dead set on mandating sprinklers in new SFH.

    Just a simple new rule like mandating arc fault breakers in bedrooms can result in a $500 increase on average. Now require them for every circuit and you are in the thousands.

  13. Fabius Maximus says:

    “Just a simple new rule like mandating arc fault breakers in bedrooms can result in a $500 increase on average.”

    Is that coming in on a Local, State or Fed requirement?

  14. Polish Future says:

    Spambots endorse the Lost Plumpskin. The truly stupid will inherit the suburbs and Plumpskin has planted the flag. Plumps is a vast nucleation site for intelligence, thought, and culture.

  15. D-FENS says:

    What Really Happened When Washington Crossed The Delaware

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