America's big coastal cities are known for their pricey real estate, driven by zoning restrictions and inadequate supply of homes. Now those problems are increasingly bedeviling once-affordable towns and cities across the U.S., a new study finds.
https://www.cbsnews.com/news/real-estate-housing-shortage-crisis/
More than half of the nation's metropolitan regions had an undersupply of homes in 2019, a sharp increase from one-third of cities in the 2012, according to a recent analysis from housing policy group Up For Growth. The nation is short 3.8 million homes to meet its housing needs — double the number from 2012 — Up for Growth found.
But the lack of housing is spreading beyond large coastal metropolises like San Francisco and New York and into communities across the U.S. As a result, home prices have surged even in smaller cities while exacerbating inequality, with high housing costs shutting out many people of color, young adults and low-income workers from the dream of homeownership
That could have long-term implications if many Americans are locked out of home buying, which is considered one of the primary avenues for building wealth over time.
"Clearly, affordability is at a crisis point for millions of Americans across the country," said Mike Kingsella, CEO of Up For Growth, which focuses on addressing the housing shortage. "Where we are seeing underproduction, we're seeing homeownership fall further and further out of reach."
As part of that growing shortage, 83 cities that had enough housing as of 2012 by 2019 had an undersupply of homes, Up for Growth found in its analysis of Census data. These now housing-starved cities include large metro areas such as the Phoenix-Mesa-Chandler region as well as smaller cities such as Merced, California, and Bend, Oregon.
To be sure, the report covers a period predating the pandemic's outsized impact on the real estate market, when work-from-home policies allowed people in big cities to relocate to less expensive regions. That housing demand, combined with a worsening shortage of homes and low interest rates, pushed prices to new heights, with the median home sales price reaching a record $416,000 in June.
At the same time, the Federal Reserve's recent interest-rate hikes are making it more expensive not only to buy homes, but also to build them, which could aggravate the undersupply problems, Kingsella said. "It's hard to imagine that we would see this get better."
However, he noted, policy changes such as zoning reform bills that allow accessory dwelling units and denser housing could help alleviate some of the issues.
Where housing is in short supply
The 83 metropolitan regions that shifted from having a sufficient housing supply to a shortfall are scattered across the U.S. Many of them are less affluent cities that lack the booming tech, finance and other major industries found in America's biggest urban hubs.
Take Merced, California, a small city in central California that's known for agriculture as well as serving as a base for visiting Yosemite National Park. The town's home prices was decimated by the 2008 housing bust, losing 31% of their value in a single year and making it the second worst-performing real estate market that year after Stockton, California, according to Zillow
But since 2012, Merced's housing market has faced another crisis: not enough homes available for those who want them. In 2019, the city had a shortage of homes that represented 8.7% of its total housing stock. That's even greater than Los Angeles' housing undersupply, which stood at 8.4% the same year, according to the analysis.
With a scarcity of homes, competition among house-hunters in Merced has pushed prices higher. The median home value in Merced stood at $282,900 in 2019, more than double its level in 2012, Up For Growth found. By comparison, the median home value across the nation's 310 metropolitan regions rose about 40% in the same period.
Other cities that shifted from enough homes to a housing shortage include Rust Belt cities like Wisconsin's Appleton, Racine and Green Bay. All three metros have an undersupply of about 5%, the analysis found. Some cities in the Southeast have also been hit by the trend, including the Atlanta area; Richmond, Virginia; and Hilton Head Island-Bluffton, South Carolina.
"California doesn't have a monopoly on exclusionary housing," Kingsella noted. "We're seeing the Southeast particularly falling deeper and deeper into a housing deficit, and at a rate that's much more rapid than places like California."
"We have a problem"
The current housing market is particularly tough on low-income Americans, said Peggy Bailey, vice president for housing policy at the research group Center on Budget and Policy Priorities, who testified on Thursday at a Senate hearing on the state of housing in America.
When new properties are developed, they are now often aimed at middle- and higher-income households, partly due to the pressures on developers from rising prices for land, supplies and labor — all costs that have sharply increased during the pandemic. As a result, low-income and affordable housing projects are becoming unaffordable for developers, according to Pew Stateline.
"We have partly been in a development boom over the last 18 months," but the typical rents for those properties are about $1,700 to $1,800 a month, Bailey said at the hearing. "The median renter can only afford about $1,000 month."
Housing shortages and affordability issues are hurting the economy, said Senator Jon Tester, a Democrat from Montana.
We have a problem," he said. "It is having some major impacts on economic growth in small towns because there's no place for the workforce to live, no place for entrepreneurs to live."
Widening wealth inequality
Changing zoning laws and supporting funding for more affordable housing are among the strategies that could help alleviate the housing shortage crisis, Kingsella said. For instance, areas that have job opportunities and strong infrastructure, but lack sufficient housing, could support up to 40% greater housing density, the Up For Growth report noted.
"It means supporting more homes and [Accessory Dwelling Units] and duplexes and triplexes and showing up at city council meetings and saying yes to more housing," he said.
Without expanding the nation's housing supply, in short, the market's dynamics aren't likely to change. A continued shortage will benefit existing homeowners, without helping those with lower rates of homeownership, such as Black Americans, experts say.
"If we are raising demand but not increasing supply, most of the benefits would go to current owners, who tend to be White Americans," noted Lawrence Yun, chief economist at the National Association of Realtors, at the Senate hearing.
It might feel good for current homeowners to see their Zillow "Zestimate" rising each year, but surging home prices divorced from a similar surge in household incomes are contributing to widening wealth inequality, Kingsella noted.
Because home prices are rising much faster than incomes, current homeowners are growing their wealth at a faster pace than people who can't get a foothold into the housing market, Kingsella said. "We're seeing housing costs in particular driving income and wealth inequality," he added.
— With reporting from Irina Ivanova
No comments:
Post a Comment