Housing Market Shortage Sharpens in Suburbs, Small Towns, Report Says. A Washington D.C. nonprofit, Up for Growth, devoted to solving the nation’s housing shortage, issued a new report Thursday that found the U.S. housing shortage has “accelerated” in suburbs and small towns.
Up for Growth, which describes itself as a “cross-sector member network” committed to solving the country’s housing shortage and affordability crisis with data, released its second annual report titled “2023 Housing Underproduction in the U.S.”
The study, which tracked the nation’s housing underproduction from 2012 until 2021, showed a “housing deficit that is spreading rapidly to America’s suburbs, small towns, and rural areas — a shift from earlier findings that revealed a housing crisis primarily centered in U.S. coastal and urban areas,” according to a news release.
Understanding Housing Underproduction
The group defines housing underproduction as what occurs when “communities fall short of meeting housing needs,” and it calculates it as the difference between total housing need and total housing availability.
The U.S.’s housing underproduction reached 3.9 million homes in 2021 — a 3% jump from 2019, the study found. However, for the first time in nearly 10 years, housing availability increased in the nation’s top 25 major metro areas as the pandemic’s remote work opportunities allowed thousands of Americans to leave high-cost urban areas.
“On its surface, an easing of the housing shortage in urban areas seems like positive news for homeowners and renters. Instead, it tells the story of a deepening crisis resulting from a century of exclusionary housing policy and set off nearly a decade ago by major demographic shifts, a historic economic recession, and chronic housing underproduction,” Mike Kingsella, CEO of Up for Growth, said in a statement.
“The COVID-19 pandemic enabled thousands of Americans, abruptly freed from the need to go into offices every day, to abandon high-cost urban centers in favor of suburbs, small towns, and rural communities where the housing crisis has intensified,” Kingsella said.
Shift in Housing Shortage
The number of counties across the U.S. experiencing underproduction of housing increased 32%, the study states, and that shortage is shifting from urban areas to outlying areas too with only a minimal increase in availability in urban areas.
“Driven by population loss, housing availability increased 0.3% in urban America,” the study states. “Housing underproduction increased by 4.5% in the suburbs, spurred by high levels of household formation. Due to a sudden and dramatic drop in unit delivery, housing underproduction increased by 47.8% in small towns.”
Top 10 States with Most Severe Shortage
In order of severity, here are the top 10 states with the most severe housing underproduction, according to the Up for Growth study:
- California, with a shortage of over 881,000 homes.
- Idaho, with a shortage of over 42,000 homes.
- Utah, with a shortage of over 61,000 homes.
- New Hampshire, with a shortage of over 31,000 homes.
- Oregon, with a shortage of over 87,000 homes.
- Washington, with a shortage of over 147,000 homes.
- Minnesota, with a shortage of over 106,000 homes.
- Colorado, with a shortage of over 101,000 homes.
- Arizona, with a shortage of over 120,000 homes.
- New Jersey, with a shortage of over 144,000 homes.
These figures from 2021 may not consider that states like Utah and Idaho underwent a dramatic housing boom as builders raced to meet demand amid the pandemic housing rush.
That year, Utah made a sizable dent in its housing shortage, according to more local estimates by housing researchers at the University of Utah’s Kem C. Gardner Policy Institute, bringing it to 31,000 in 2021 compared to about 56,800 in 2017. The researchers compared increases in households against increases in housing units.
However, as homebuilding activity contracts amid today’s high mortgage interest rates, those researchers now expect Utah’s housing shortage will worsen, likely to increase to over 37,000 units by 2024.
It’s also worth considering that even though states like Utah and Idaho continue to have a housing shortage problem like other states across the U.S., they’re also among the top states that have built the most housing over the past decade. Their “underproduction” or housing shortages is largely due to the fact that they’re among the fastest growing states in the nation.
“Not a single state is providing enough housing for its citizens, and the nation is poorer, less diverse, and less dynamic than it could be if everyone who wanted it had access to affordable shelter in high-opportunity areas,” Kingsella said.
He urged policymakers to “make the straightforward but difficult choice to prioritize new funding sources that allow for diverse housing types, to invest in construction innovations, and to bolster infrastructure funding despite the risks posed” by not-in-my-backyard opposition groups.
“Only then will we slow the pace of housing underproduction and, over time, begin to reverse it,” Kingsella said.
Read More – What is Housing Underproduction?
Housing Underproduction occurs when communities fall short of meeting housing needs. Up for Growth calculates underproduction as the difference between total housing need and total housing availability.
Not since the beginning of suburbanization in the early 20th century have household formation patterns shifted as dramatically as they have since March 2020. Although the United States produced more housing units in 2020 than in 2019, it was insufficient to meet demand, and production was misaligned with quickly shifting preferences for where people wanted to live.
Housing Underproduction is Getting Worse
Nationally, underproduction increased by nearly 3% to 3.9 million missing homes.
It is Spreading Geographically
The number of counties across the U.S. experiencing underproduction increased 32%.
It is Shifting from Urban Areas to Suburbs and Small Towns
Driven by population loss, housing availability increased by 0.3% in urban America. Housing underproduction increased by 4.5% in the suburbs, spurred by high levels of household formation. Due to a sudden and dramatic drop in unit delivery, housing underproduction increased by 47.8% in small towns.