Affordability crisis: United States needs 4.3 million more homes
Gap between families and available homes widens and likely continues to grow
- A lack of affordable homes has created millions of “missing households,” keeping families in shared homes and unable to strike out on their own
- More than two-thirds of these missing households earn less than $35,000 a year, highlighting the economic barriers many face when trying to find a place of their own
A significant shortage of affordable housing options is fueling America’s affordability crisis, particularly for those looking to move out on their own for the first time, a new Zillow analysis shows. This huge housing deficit underscores the need for policies and investments that can boost construction.
This lack of housing — especially affordable options — has left millions of households “missing.” These missing households consist mainly of individuals and families living in another family’s owned or rented home. Across the country in 2021, there were nearly 8 million missing households, compared to just 3.7 million housing units available for rent or sale, a deficit of 4.3 million homes.
“The U.S. housing market is like a high-stakes version of the game musical chairs,” said Orphe Divounguy, senior economist at Zillow. “There are simply not enough homes for millions of people. Unless we address the shortage of smaller, more-affordable, starter-type homes, we risk leaving families without a seat — and it will only get worse over time.”
For each of the 3.7 million housing units available for rent or sale across the country in 2021, there were more than two potential households — families likely in need of their own homes. This means even if every missing household was willing and able to move into their own home, 4.3 million households would have been left without a place to move to.
The bulk of families doubling up have consistently lower incomes, highlighting the need for smaller, more affordable housing. Of the families that are doubling up, 68% had an annual income of $35,000 or less.
The mismatch between potential housing needs and available homes across the country is playing out in dramatic fashion in the most expensive coastal housing markets, such as Los Angeles, San Francisco, San Jose, San Diego and Boston but also in places like Boise.
What policymakers can do
Construction productivity has been declining relative to the rest of the U.S. economy since the late 1960s, with land-use restrictions, building approval delays, and stunted construction sector growth all contributing to the lack of new home construction across the country. Policymakers should explore ways to boost production and overall growth of the construction sector to ensure housing supply can catch up to demand.
Additionally, experts are near unanimous that loosening restrictive zoning laws is critical to creating more supply and easing housing costs. According to public polling conducted by Zillow, four out of five adults support allowing more, smaller home types to be built in their own neighborhoods. Researchers also suggest that speeding up building permitting, eliminating parking requirements, tax incentives to rehabilitate underutilized housing stock, and expanding affordable housing trust funds could all help ease the shortfall in new construction.
SOURCE Zillow
