LR441 - Examining the Impact of Local Housing Regulations on Nebraska’s Housing Supply

The housing market in Nebraska is facing significant challenges, and one major factor contributing to this issue is local housing regulations. In an effort to better understand the impact of these regulations on the state's housing supply, the Nebraska Legislature has launched LR441, an interim study that seeks to explore the challenges and potential solutions surrounding affordable housing. On October 4th, 2024, TinyMod® co-founder Kevin Lockhart was invited to speak at a hearing held at the Nebraska State Capitol. His expertise on modular housing solutions could offer valuable insights into how to increase affordable housing options across Nebraska in a faster and more sustainable way.

Kevin Lockhart at the Nebraska State Capitol: Modular Solutions for Affordable Housing

Kevin Lockhart's invitation to speak at the LR441 hearing highlights the growing recognition that traditional housing construction may not be enough to meet Nebraska’s housing demands. At the hearing, Lockhart emphasized the benefits of modular construction as a rapid and scalable solution to the housing crisis, particularly for median-income families. He discussed how modular homes, like those offered by TinyMod™, could be the key to addressing the state’s missing median-income housing.

What Is Median-Income Housing and Why Is It Missing in Nebraska?

Median-income housing is designed to be affordable for households earning between 80% and 120% of the Area Median Income (AMI). This type of housing is crucial for individuals and families who do not qualify for low-income housing programs but still struggle to afford market-rate housing. Unfortunately, Nebraska is currently facing a shortage of such housing options.

According to 2022 data, the median household income in Nebraska is approximately $78,360. To be considered affordable, housing costs should account for no more than 28% of a household's gross income. Here’s what that means for Nebraska’s median-income families:

• Monthly Income: $78,360 / 12 = $6,530
• 28% for Housing Costs: 0.28 * $6,530 = $1,828.40

This means a family earning Nebraska’s median income should aim to spend no more than $1,828 per month on housing-related costs, including mortgage, property taxes, and insurance. However, in many parts of the state, housing that fits within this budget is becoming increasingly scarce. Families earning between 80% and 120% of the AMI often fall into a gap where they do not qualify for housing assistance but still find market-rate housing unaffordable.

Why It Matters: Addressing the Median-Income Housing Gap

The median-income housing gap in Nebraska is a significant issue for economic growth, community stability, and social equity. Families that fall within this income bracket are often vital members of the workforce, including teachers, healthcare workers, and first responders. These individuals help to keep Nebraska’s communities thriving, yet many are being priced out of homeownership or are forced into renting for longer periods than they would like.

As a result, the housing market is out of balance, with too few affordable options for those who do not qualify for low-income housing but still cannot afford the rising costs of homeownership. Without intervention, this imbalance could worsen, leading to higher levels of economic strain for middle-class families and ultimately making Nebraska a less attractive place to live and work.

The TinyMod® Solution: Offsite Modular Construction for Affordable Housing

One promising solution to Nebraska’s housing crisis lies in modular construction, which allows for offsite building in a controlled environment. This method of construction offers several key advantages:

• Improved efficiency: Offsite construction allows for faster build times since much of the construction happens simultaneously with site preparation. This is crucial when trying to address a housing shortage.
• Reduced waste: Modular construction is more sustainable, producing significantly less waste compared to traditional site-built homes.
• High-quality standards: Despite the speed and efficiency of modular homes, they are built to the same 2018 International Residential Code (IRC) standards as traditional homes.

These homes provide flexibility, affordability, and customization, making them a perfect fit for families earning a median income. TinyMod® specializes in energy-efficient, customizable homes that not only meet the needs of median-income families but do so in a way that accelerates the path to homeownership without sacrificing quality.

Busting Common Myths About Modular Homes

There are some common misconceptions surrounding modular homes, but TinyMod® is working to dispel these myths. Here’s the reality:

• Modular homes are built to the same codes as traditional homes, ensuring safety, durability, and comfort.
• Financing options for modular homes are the same as for site-built homes, which means buyers can qualify for the same loans and financial support.
• Architectural appeal is fully customizable. Modular homes can be tailored to meet the aesthetic and functional preferences of homebuyers.
• Valuation and appraisal: Modular homes are appraised in the same manner as traditional homes, meaning they retain and grow in value at the same rate as site-built houses.

The Way Forward: Leveraging Modular Housing for Nebraska's Future

The need for median-income housing is clear, and Kevin Lockhart's testimony at the Nebraska State Capitol highlights how TinyMod®’s modular housing solutions can help fill this gap. By embracing offsite modular construction, Nebraska has an opportunity to address its housing shortage swiftly and efficiently.

As the LR441 interim study progresses, policymakers will be weighing the impact of local housing regulations on housing supply. TinyMod® is optimistic that modular construction will be recognized as a vital component of Nebraska’s future housing strategy.

For families earning between 80% and 120% of the AMI, modular homes offer a clear path to affordable homeownership, combining flexibility, efficiency, and sustainability. It’s time to rethink how we approach housing in Nebraska—and modular construction could be the key to a more affordable future for all.