To put it another way, backlogs are caused by the forces of the market, and they remain even during times of economic prosperity because the government imposes restrictions on the rate of new construction.
Mr. Khater described the situation as “a power struggle.” “Both the market and the government are failing us at this point,” said the speaker.
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These shortcomings are all on display in San Francisco, which has been suffering from a housing shortage for several decades. When loan rates were historically low and demand was robust, builders had a strong desire to develop new homes but were unable to do so since it took them years to acquire all of the necessary clearances and permits. Now that the market has shifted, some of the projects that were able to survive that process are being called off because builders can no longer afford to build them. This is causing a delay in the completion of those projects.
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Michael Covarrubias, the chief executive officer of TMG Partners and a developer of residential and commercial property in the Bay Area, is also the name behind the company. Mr. Covarrubias indicated that he had two projects that he could legally begin construction on, and that together they would have approximately 800 units. However, because of the escalating costs of supplies and financing, they have been placed on unpaid vacation.
Mr. Covarrubias was quoted as saying, “Real estate, at its essence, is a basic operation. It is absolutely necessary to achieve a return on your prices; but, it is becoming progressively more difficult to make the calculations work.”
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Because there is still a persistent lack of housing around the country, a number of lawmakers have been prompted to reconsider an antiquated notion known as public housing. Legislators in the states of California, Hawaii, Rhode Island, Maryland, and Colorado have either introduced or passed legislation that would make it possible for state and local governments to build housing that caters to a range of economic levels.
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Alex Lee, a Democrat from San Jose who is also a member of the California State Assembly, made the following statement: “If the government will get into the business of delivering homes, we will be that countercyclical supply.” Mr. Lee proposed a bill earlier this year that would have established a new state agency with the mission of constructing mixed-income housing throughout the state of California. Although it was defeated in committee, Mr. Lee remains committed to continuing his pursuit of government-built housing.