This story was originally published in Builder.

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Pittsburgh, my home town, and San Francisco have a lot in common. In response to their respective hills, both have developed unusual forms of mass transportation: San Francisco has its cable cars, and Pittsburgh has it funiculars. There’s water everywhere in both cities, and each is famous for its bridges: San Francisco has the Golden Gate, and Pittsburgh has 446 bridges, the most of any city in the world. And the NFL teams in both cities have won a lot of Super Bowls. But the two cities do have their differences. They drink beer and eat meat in Pittsburgh, and they drink wine and eat vegetables in San Francisco.

But the biggest and most important difference between San Francisco and Pittsburgh revolves around housing affordability.

According to NAHB’s Housing Opportunity Index, which shows the percentage of homes sold in an area that would have been affordable to a family earning the local median income, Pittsburgh is one of the most affordable major metro markets and San Francisco is the least affordable. A family earning the median income in Pittsburgh could afford about 90 percent of the homes sold there; in San Francisco the percentage drops to less than 10 percent. Not surprisingly, Pittsburgh has the highest homeownership rate—78 percent—among major metros, while San Francisco’s rate is less than 50 percent.

Nationally, NAHB’s index is at 62, a drop from the cyclical high of 78 in 2012. That, along with the fact that the home price-to-income ratio, which long term hovers around 3, has climbed to more than 4, has started talk about a housing affordability problem that could become, especially if mortgage interest rates rise, a catastrophe for the housing industry.

In the past six years, the median price of a new single-family home has increased from $162,000 to $252,000. That’s a 55 percent increase, triggered in part by builders building bigger, more expensive houses. According to the NAHB, a 30 percent increase in costs associated with regulation also have played a major role in housing price inflation. The NAHB pegs the average cost of regulation at $85,000 per home, which translates to about one-third of the median price of a new home. (According to the Wharton Regulatory Index, which in essence measures the burden of regulation on housing, San Francisco is one of the most regulated markets while Pittsburgh is among the least regulated.)

So regulation is a factor in solving the affordability problem in high-cost housing markets. But so is community design, planning, building products, construction technology, access to capital, business management, and market intelligence (or lack thereof).

All of these factors will be explored Nov. 28-29 at Hanley Wood’s third annual HIVE conference in Austin, Texas. Nobody there will argue that all regulation is unnecessary or that all builders should build only starter homes or that factory-built components will in and of themselves dramatically reduce costs. Instead there will be an open-minded search for innovative yet practical ways to control housing costs. If you want to try to solve housing’s affordability problem—not everybody can live in Pittsburgh—and if you’re interested in building and selling more houses, you should attend HIVE.

I look forward to meeting you there. For more information visit

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