The U.S. needs about 3.8 million housing units to keep up with household growth, a crisis with multiple causes, some of which go back to the Great Recession.
NEW YORK – The U.S. housing shortage started as a crisis along both coasts but has evolved into a national problem that ultimately threatens Americans’ quality of life, the national economy and even the current housing construction model.
According to Freddie Mac, the country is short 3.8 million housing units in order for it to keep up with household expansion. Up For Growth, a national cross-sector network formed to seek solutions to housing affordability issues, says the housing deficit doubled from 2012 to 2019, reducing supply in 47 states and the District of Columbia.
As a result, home prices and rents have skyrocketed, including in areas known for housing affordability, due to spiking demand fueled by the pandemic and the ability for some workers to seek out affordable housing thanks to a new-found ability to work from home.
Why is there a problem? Forces affecting affordability today include a labor shortage that can be traced back to the Great Recession, more expensive building materials, rising costs for land and tightened lending standards for builders.
“Over the last four or five years, every place I go, they cite underbuilding,” remarks National Association of Home Builders Chief Economist Robert Dietz. He says communities losing residents are the exception, while elsewhere, “it was just a matter of degree and scale.”
The cost of housing in the highest-paying, most productive U.S. regions discourages people from relocating – if you live there and own a home, it makes sense to stay; if you wish to move where the jobs are, the cost of housing makes it difficult.
Meanwhile, higher-income households are jockeying for limited housing inventory.
Source: New York Times (07/14/22) Badger, Emily; Washington, Eve
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