The housing market in the U.S. fell 7.3 million units short of meeting the demand for homes between 2000 and 2015, according to a report titled Housing Underproduction in the U.S. by Up for Growth National Coalition, ECONorthwest, and Holland Government Affairs.
The report, which focused on 22 states and Washington, D.C., found that they fell short by around 5.4 percent of the total housing stock over the 15-year period and that this underproduction had created a supply and demand imbalance that was reflected in today’s high home prices. While almost every state fell short of housing supply, California accounted for over 45 percent of the total supply at nearly 3.4 million units, the report indicated.
“The housing shortage is far more severe than originally believed and much more widespread,” said Clyde Holland, Founder, and CEO of Holland Partner Group and Executive Chairman of Up for Growth. “From California to Maine, the supply of housing is simply not matching its growing demand. Not building enough new housing pushes rents up, forces quality of life down, and is a significant drag on the economy.”
Making a case for development close to high transit areas to alleviate the supply-demand gap, the report took two future scenarios into consideration. In the first scenario, the report analyzed the development of housing using the current pattern and found that 54 percent of the 7.3 million new units would be single-family homes, 40 percent would be middle and medium density homes such as townhomes, cottage clusters, and mid-rise buildings; and 6 percent would be multifamily apartment towers.
This scenario, the study said, would require much more land and infrastructure installation. It would also not cater to the lifestyle choices of younger Americans.
In the second scenario, if housing development leveraged existing infrastructure to achieve higher density inside transit corridors, 10 percent of the new 7.3 million units would be single-family homes, while 61 percent would be in the middle and medium density developments. Twenty-nine percent would be in multifamily apartment towers, the study indicated.
According to Dr. Chris Herbert, Managing Director of Harvard’s Joint Center for Housing Studies, this report made a strong analytical case for policies that would enable a greater volume of higher density, transit-oriented development. “The findings offer compelling evidence that such policies would reduce infrastructure costs and vehicle miles traveled and expand the supply of housing, helping to alleviate upward pressure on rents and home values,” Herbert said.