The growing housing shortage is the primary
reason for the affordability crisis
- From 2021 to 2022, the U.S. housing shortage grew to 4.5
million homes, up from 4.3 million.
- In 2022, the number of U.S. families increased by 1.8 million,
while only 1.4 million housing units were built.
- Those who live in markets with stricter land-use regulations
are less likely to be able to afford the mortgage payment on a
typical home.
SEATTLE, June 18,
2024 /PRNewswire/ -- Despite a pandemic construction
boom, the U.S housing shortage grew to 4.5 million homes in 2022,
up from 4.3 million the year before, according to a new analysis
from Zillow®.1 This deepening housing deficit is
the root cause of the housing affordability crisis.
At its core, the housing market is driven by supply and demand.
When the number of people who want a home increases faster than the
number of homes available, prices go up. This balance reached a
tipping point when the Great Recession ushered in a decade of
underbuilding and millennials — the biggest generation in U.S.
history — reaching the prime age for first-time home buying. The
result has been worsening affordability, now exacerbated by
stubbornly high mortgage rates.
"The simple fact is there are not enough homes in this country,
and that's pushing homeownership out of reach for too many
families," said Orphe Divounguy, senior economist at Zillow. "The
affordability crisis extends to renters as well, with nearly half
of renter households being cost burdened. Filling the housing
shortage is the long-term answer to making housing more affordable.
We are in a big hole, and it is going to take more than the status
quo to dig ourselves out of it."
Across the country in 2022, there were roughly 8.09 million
"missing households" — individuals or families living with
nonrelatives. Compare that to 3.55 million housing units that were
available for rent or for sale, and there is a housing shortage of
more than 4.5 million.
The pandemic-era housing frenzy sparked a construction boom, but
thus far, that boom has fallen short. In 2022, 1.4 million homes
were built — at the time, the best year for home construction since
the early stages of the Great Recession. However, the number of
U.S. families increased by 1.8 million that year, meaning the
country did not even build enough to make a place for the new
families, let alone begin chipping away at the deficit that has
hampered housing affordability for more than a decade.
One indicator of housing affordability is how strict a region's
land-use rules are, new Zillow research shows. Those who live in
highly regulated housing markets, as defined by the Wharton
Residential Land Use Regulatory Index, are less likely to be able
to afford the mortgage payment on a typical home in their metro,
even in markets with higher-than-average incomes. This is because
housing supply persistently falls short.
What's ahead
According to the U.S. Census Bureau,
roughly 1.45 million homes were completed in 2023. The increase
over 2022 is a sign of progress, but much more needs to be
done.
Reforming zoning rules to allow for more density is key for more
homes to be built. Experts overwhelmingly agree that relaxing
zoning laws is one of the best ways to improve affordability, and
these types of measures have broad support among homeowners and
renters. Even adding a modest amount of density in the country's
biggest markets could create millions of new homes.
More steps in the right direction include eliminating or
reducing parking requirements and minimizing delays in approval of
building permits.
Metro
Area*
|
Housing
Shortage
(2022)
|
Change in
Housing
Shortage YoY (#)
|
Change in
Housing
Shortage YoY (%)
|
Share of
Non-Homeowner
Households That Could
Afford Typical Mortgage
|
United
States
|
4,540,773
|
256,847
|
6.0 %
|
15.1 %
|
New York, NY
|
389,924
|
13,548
|
3.6 %
|
9.3 %
|
Los Angeles,
CA
|
336,728
|
2,866
|
0.9 %
|
2.8 %
|
Chicago, IL
|
97,379
|
9,946
|
11.4 %
|
22.0 %
|
Dallas, TX
|
48,150
|
528
|
1.1 %
|
14.5 %
|
Houston, TX
|
20,028
|
3,631
|
22.1 %
|
18.5 %
|
Washington,
DC
|
132,380
|
-1,591
|
-1.2 %
|
13.0 %
|
Philadelphia,
PA
|
72,584
|
7,795
|
12.0 %
|
17.2 %
|
Miami, FL
|
66,944
|
6,887
|
11.5 %
|
9.2 %
|
Atlanta, GA
|
65,543
|
2,076
|
3.3 %
|
13.7 %
|
Boston, MA
|
154,985
|
3,220
|
2.1 %
|
7.0 %
|
Phoenix, AZ
|
93,984
|
6,988
|
8.0 %
|
6.8 %
|
San Francisco,
CA
|
151,491
|
-10,090
|
-6.2 %
|
3.7 %
|
Riverside,
CA
|
76,988
|
4,634
|
6.4 %
|
5.5 %
|
Detroit, MI
|
34,772
|
-387
|
-1.1 %
|
23.1 %
|
Seattle, WA
|
107,897
|
-961
|
-0.9 %
|
5.5 %
|
Minneapolis,
MN
|
77,560
|
965
|
1.3 %
|
12.0 %
|
San Diego,
CA
|
93,939
|
-555
|
-0.6 %
|
2.6 %
|
Tampa, FL
|
31,342
|
3,255
|
11.6 %
|
10.8 %
|
Denver, CO
|
70,197
|
504
|
0.7 %
|
5.1 %
|
Baltimore,
MD
|
36,808
|
2,681
|
7.9 %
|
16.0 %
|
St. Louis,
MO
|
14,824
|
1,647
|
12.5 %
|
22.6 %
|
Orlando, FL
|
21,528
|
6,173
|
40.2 %
|
11.1 %
|
Charlotte,
NC
|
18,494
|
689
|
3.9 %
|
12.8 %
|
San Antonio,
TX
|
15,778
|
1,141
|
7.8 %
|
15.3 %
|
Portland, OR
|
72,284
|
-4,433
|
-5.8 %
|
5.1 %
|
Sacramento,
CA
|
62,724
|
-1,025
|
-1.6 %
|
4.9 %
|
Pittsburgh,
PA
|
15,632
|
-1,462
|
-8.6 %
|
25.6 %
|
Cincinnati,
OH
|
32,281
|
1,249
|
4.0 %
|
18.2 %
|
Austin, TX
|
61,332
|
4,587
|
8.1 %
|
7.3 %
|
Las Vegas,
NV
|
29,075
|
2,619
|
9.9 %
|
8.4 %
|
Kansas City,
MO
|
27,579
|
1,219
|
4.6 %
|
19.5 %
|
Columbus, OH
|
34,979
|
1,580
|
4.7 %
|
17.9 %
|
Indianapolis,
IN
|
14,675
|
468
|
3.3 %
|
18.3 %
|
Cleveland,
OH
|
15,383
|
1,763
|
12.9 %
|
22.4 %
|
San Jose, CA
|
57,556
|
-3,339
|
-5.5 %
|
2.7 %
|
Nashville,
TN
|
35,985
|
1,076
|
3.1 %
|
7.2 %
|
Virginia Beach,
VA
|
18,843
|
1,254
|
7.1 %
|
15.9 %
|
Providence,
RI
|
26,473
|
3,867
|
17.1 %
|
7.7 %
|
Jacksonville,
FL
|
14,250
|
-123
|
-0.9 %
|
11.8 %
|
Milwaukee,
WI
|
14,906
|
2,144
|
16.8 %
|
14.4 %
|
Oklahoma City,
OK
|
13,970
|
2,301
|
19.7 %
|
22.5 %
|
Raleigh, NC
|
11,731
|
-5,245
|
-30.9 %
|
9.9 %
|
Memphis, TN
|
3,350
|
252
|
8.1 %
|
20.6 %
|
Richmond, VA
|
16,363
|
974
|
6.3 %
|
15.0 %
|
Louisville,
KY
|
9,963
|
1,912
|
23.7 %
|
20.0 %
|
New Orleans,
LA
|
4,204
|
1,192
|
39.6 %
|
16.4 %
|
Salt Lake City,
UT
|
29,955
|
1,857
|
6.6 %
|
3.8 %
|
Hartford, CT
|
13,222
|
-223
|
-1.7 %
|
18.1 %
|
Buffalo, NY
|
15,201
|
1,860
|
13.9 %
|
17.1 %
|
Birmingham,
AL
|
4,041
|
804
|
24.8 %
|
17.6 %
|
*
|
Table ordered by
market size
|
About Zillow Group:
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Zillow affiliate.
1 The housing shortage is defined as the difference
between the number of families that were likely to be seeking their
own home and the number of homes that were available for rent or
sale. Families in this case are defined as sets of individuals who
are related within each household. The number of families that are
likely to be seeking their own home is defined by the number of
families living in other families' housing units. The family count
comes from IPUMS USA using the
FAMUNIT variable and the appropriate weights.
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SOURCE Zillow