Large coastal cities in the United States are known for their expensive real estate, driven by zoning restrictions and inadequate housing supplies. Now, new research shows that these problems are increasingly plagued towns and cities throughout the United States that were once affordable.
According to recent reports, more than half of the country’s metropolitan areas were undersupplied in 2019, up from one-third of cities in 2012. analysis From the housing policy group UpForGrowth. The country is short of 3.8 million homes to meet housing demand — twice as many as in 2012 — Upfor Growth was found.
However, housing shortages have spread to communities throughout the United States, beyond large coastal metropolises such as San Francisco and New York. As a result, home prices have skyrocketed even in small cities, with high housing costs and many colored races locked out, exacerbating inequality. Young adults and low-income workers from the dream of owning a home.
If many Americans are locked out of home purchases, it can have long-term implications. This is considered one of the main means of building wealth over time.
“Obviously, affordability is at stake for millions of Americans across the country,” said Mike Kingsella, CEO of UpFor Growth, which focuses on addressing housing shortages. “Where we see production shortages, we see home ownership becoming more and more out of reach.”
As part of that growing shortage, 83 cities that had sufficient housing as of 2012 by 2019 were in short supply of housing, and analysis of census data found Up for Growth. These currently housing-deficient cities include metropolitan areas such as the Phoenix-Mesa-Chandler region, as well as smaller cities such as Merced, California and Bend, Oregon.
Indeed, the report covers the pre-pandemic period.When the telecommuting policy allows people in big cities to move to cheaper areas. That housing demand, coupled with worsening housing shortages and low interest rates, pushed prices to new heights, with median home sales reaching a record $ 416,000 in June.
At the same time, the Federal ReserveAccording to King Serra, not only buying a home, but also building one can be expensive, which can exacerbate the problem of supply shortages. “It’s hard to imagine that this will improve.”
However, he said policy changes, such as the zoning reform bill that would allow attached housing units and more densely populated housing, could help alleviate some problems.
Where there is a shortage of housing
Eighty-three metropolitan areas that have transitioned from adequate housing to shortages are scattered throughout the United States. Many of them are non-wealthy cities lacking the fast-growing technology, finance, and other major industries found in America’s largest urban hub.
Merced, California is a small city in central California, known for its agriculture and home to Yosemite National Park. Home prices in the town fell due to a housing collapse in 2008, losing 31% of its value in a year, making it the second poorest performing real estate market after Stockton, California. according to To Zillow.
But since 2012, Merced’s housing market has faced another crisis. That is, there is a shortage of housing available to those who want it. In 2019, the city was short of housing, accounting for 8.7% of total housing stock. According to the analysis, this is even greater than the housing shortage in Los Angeles, which was 8.4% in the same year.
Due to the lack of housing, competition among Merced house hunters is pushing up prices. The median home price for Merced was $ 282,900 in 2019, more than double that of 2012. By comparison, median home prices across 310 metropolitan areas across the country rose about 40% over the same period.
Other cities that have transitioned from adequate housing to housing shortages include Rust Belt cities such as Appleton, Racine, and Green Bay in Wisconsin. Analysis shows that all three metros have a supply shortage of about 5%. Several cities in the southeast, including the Atlanta region, are also experiencing this trend. Richmond, Virginia; and Hilton Head Island-Bluffton, South Carolina.
“California does not monopolize exclusive homes,” King Serra said. “The southeast is getting deeper and deeper, especially in housing shortages, and it’s moving much faster than in places like California.”
“There is a problem”
Peggy, Research Group’s Vice President of Housing Policy on Research Group Budget and Policy Priorities, testified Thursday at a Senate hearing on US housing conditions that the current housing market is particularly tough for low-income Americans.・ Bailey said.
When new properties are developed, they are often targeted at middle- and high-income households due to all the costs that have risen sharply during the pandemic, such as pressure on developers due to rising prices of land, supplies and labor. I have. As a result, low-income, affordable housing projects are becoming affordable for developers. according to To the Pure State Line.
“We’ve been in a partial development boom for the past 18 months,” Bailey said in a hearing, but said typical rents for these properties range from about $ 1,700 to $ 1,800 per month. “The median renter can only buy about $ 1,000 a month.”
Senator John Tester, a Democrat in Montana, said housing shortages and affordability problems are damaging the economy.
“There is a problem,” he said. “There is no place for labor or entrepreneurs to live, which has a huge impact on the economic growth of small towns.”
Increasing wealth inequality
According to King Serra, changing zoning laws and helping to fund more affordable homes are one of the strategies that can help mitigate the crisis of housing shortages. For example, areas with employment opportunities and strong infrastructure but lack of sufficient housing could support up to 40% higher housing densities, the UpForGrowth report said.
“It means helping more homes, [Accessory Dwelling Units] I attended the Duplex and Triplex, and the city council meetings, and I agree with more housing. ”
In short, market dynamics will not change without expanding the country’s housing supply. According to experts, a continuous shortage will benefit existing homeowners without helping low-ownerships like African Americans.
Lawrence Yun, chief economist at the National Association of Real Estate Agents, said in a hearing in the Senate, “If you increase demand but not supply, most of the benefits will come to current owners who tend to be white Americans. Let’s do it. ”
For current homeowners, it may be nice to see Zillow’s “Zestimate” rising each year, but soaring home prices divorced from similar spikes in household income are wealth inequality. King Serra says it has contributed to the expansion of the market.
According to King Serra, home prices are rising much faster than income, so current homeowners are growing their wealth at a faster pace than those who can’t get into the home market. “We especially see housing costs contributing to income and wealth inequality,” he added.
— Report from Irina Ivanova