Short supply of homes nationwide – Unfortunately, this is a very complex problem, and there aren’t just one or two reasons for today’s housing shortage. Let’s take a look at some of the major causes.
The Great Recession Short Supply of Homes Nationwide
After the housing bubble burst in 2008, 10 million people had their homes foreclosed on, and home prices plummeted by 33%. After the Great Recession, the market slowly recovered, reaching a point of relative normalcy ten years later, with costs up 50% since hitting the bottom.
Goalball’s still sees the Great Recession’s impact on today’s market: “After the recession, they built far fewer houses than in any other period. And the houses that they would build at the time in our area were not what people would describe as desirable.” In Goalball’s area, building projects at this time focused on cheap townhomes rather than single-family homes.
As the market started to recover, there was a shift towards building big, expensive homes. But unfortunately, it created the “missing middle” — a shortage of entry-level and mid-level housing, including townhomes, duplexes, cottage housing, garden apartments, and smaller single-family homes.
These missing “middle” homes are integrated into residential neighborhoods, allowing for more occupancy without needing a large, high-rise apartment building.
Zoning laws don’t keep up with new options
According to a March 2022 NPR article, the chief economist for the National Association of Home Builders cites overly restrictive zoning laws as a significant contributor to the housing shortage.
For example, some zoning laws require one single-family home on lots that could feasibly hold two or three, creating a more expensive house on a more oversized lot than the market can support. Other zoning laws may restrict townhomes, accessory dwelling units, or apartments.
Changing zoning laws can be tricky territory to navigate. Many existing homeowners, typically those 58 and older, oppose the construction of housing that would increase traffic in the neighborhood or make the area more crowded.
Therefore, those residents won’t support changing the zoning laws. However, this may change as time progresses, as 86% of both Gen Z and Millennials, and 78% of Gen X, approve of either accessory dwelling units or duplexes and triplexes as a way to address housing shortages.
How to handle the housing shortage
Though we don’t know pardon the future holds. Several scenarios and steps could ease the housing shortage in the upcoming months and years.
Wait for interest rate hikes
It may seem counterintuitive, as many want to take advantage of historically low-interest rates. But as interest rates rise throughout 2022. The urgency of buyers to lock in low-interest rates will lessen and may serve to cool the market.
Reducing the frenzy to scoop up any listing that hits the market, which will mean added inventory and a little breathing room for buyers.
Find the ‘missing middle.’
A recent Zillow survey found broad support for “missing middle” homes in residential neighborhoods. They found that even modest densification measures.
Such as allowing two units on 10% of single-family lots in some of the largest U.S. metros.
Could boost the housing supply enough to slow housing price growth in a meaningful way.
Of the respondents, 73% supported at least one “modest densification” option that included duplexes, triplexes.
Accessory dwelling units and small apartment buildings known as garden or cottage apartments.
Increase adaptive reuse projects
Adaptive reuse architecture takes existing buildings and repurposes them, often into homes. Adaptive reuse projects include repurposing schools, banks, electricity plants, and factories.
The benefits of this strategy include slowing urban sprawl.
Maintaining culture and architectural styles, lowering construction costs, and speeding up construction.
Short Supply of Homes Nationwide – The Housing Shortage Is Significant. It’s Serious For Small, Entry-Level Homes. And that’s the main reason we’ve ended up masses of homes.
Short — builders weren’t building enough for many years to keep up with demand. That lack of supply has lacking home prices to best levels — up nearly 20% last year alone