How Bad Is the Housing Shortage?
It depends who you ask – and estimates vary widely. Five reliable sources, including realtor.com, say the housing shortfall ranges from 1.7M to 7.3M homes.
NEW YORK – There are widely different estimates of the magnitude of the U.S. housing shortage.
The National Low Income Housing Coalition says the United States has a shortage of 7.3 million units; Realtor.com says 6.5 million; Fannie Mae says 4.4 million; and Up for Growth, a policy group focused on the housing shortage, says 3.8 million units.
John Burns Research & Consulting puts it at just 1.7 million.
Realtor.com’s approach to figuring out the number of missing homes is to compare new houses to new households. It puts new household formation since 2012 at 15.6 million and the number of single-family homes that began construction in that period at 9.03 million, yielding a gap of 6.5 million. However, apartments and condominiums are also an important part of the U.S. housing stock.
Fannie Mae examines “affordable housing” for those earning as much as 60% of median income, and “workforce housing” for those earning 120%. It comes up with 4.4 million too few houses at these price points.
Up for Growth estimates the total number of units needed as the total number of households plus the number of households that should have formed but have not because housing wasn’t available. They then add 5% to account for normal vacancy rates as housing units turn over.
John Burns Research & Consulting looks at demographics and vacancies, noting that housing vacancies were still elevated until the past few years – implying that many places in the U.S. were still overbuilt from the early 2000s housing boom. As a result, it thinks the shortage is 1.7 million, which is lower than most other estimates.
Source: Wall Street Journal (04/14/23) Zumbrun, Josh
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