BOK Financial executive Michael Merritt discusses ROAD to Housing Act

Merritt explained that previous attempts to fix housing affordability have largely concentrated on demand, yielding limited success. He praised the ROAD to Housing Act for its multi-faceted approach to improving housing supply, noting that it addresses various avenues to enhance this aspect. While acknowledging some demand-side elements, he emphasized that the bill's primary strength lies in its focus on the fundamental issue of insufficient housing stock, which drives up prices and makes homes unattainable for many.

Regarding the hope this package offers prospective homeowners, Merritt indicated that it could provide relief, particularly in markets affected by specific provisions. He pointed out that the limitation on institutional investors buying homes, while receiving significant attention, has a more localized impact. However, he believes that pilot programs within the bill hold greater potential for broader change. Merritt specifically cited the framework for zoning reform as a long-term fix, noting that restrictive zoning frameworks in many unaffordable areas contribute significantly to the problem.

He also mentioned that pilots for smaller-balance HUD loans are designed for longer-term impact, suggesting the legislation aims for both immediate relief and improvements over decades. Merritt acknowledged that the housing crisis did not emerge overnight and cannot be resolved instantly.

Discussing the impact of changes aimed at curbing large institutional investors, Merritt stated that in certain metro areas with limited supply, these investors can outbid everyday homebuyers with cash offers, driving up prices. He noted that while this is not a universal issue, it creates pressure in affected markets. He also raised questions about whether the bill went far enough in defining "large institutional investor" and acknowledged that larger companies might find ways to circumvent the limits.

Looking beyond the current legislation, Merritt suggested additional steps are needed. He reiterated the importance of zoning, expressing a preference for state-level adoption of frameworks to create more consistent standards and reduce building costs. He also proposed exploring ways to provide demand-side relief by addressing the cost of capital, potentially through subsidies to lower mortgage rates. Merritt felt the bill missed an opportunity to include more targeted pilots for low-income borrowers, which could have provided valuable data for future legislation.