More housing is coming – but the national shortage will persist

Local authorities across the country have approved more than a million building permits for new single-family and multi-family housing this year. That’s nearly a third since 2019 and more than double the number a decade ago, according to the US Census Bureau.

Compared to the first seven months of 2019, Texas issued 55,000 more permits and Florida issued 47,000 more this year. The number of permits issued is up by 17,000 in North Carolina, 14,000 in Arizona and more than 10,000 in California, where the state has tried to compel municipalities to facilitate the construction of new housing.

The number of permits issued fell only in Alaska, Hawaii, Illinois and the District of Columbia, a Stateline shows the analysis.

Still, experts say it could take nearly a decade to eliminate the country’s housing shortage, which has driven up house prices and rents, excluding many low- and middle-income families. A Freddie Mac report released last year said the country was short of about 3.8 million units in 2020, down from 2.5 million in 2018. Experts cite a slowdown in construction after the housing bubble in the late 2000s, with start-up houses particularly lacking.

Additionally, labor shortages and supply chain issues have lengthened the time between permitting and construction. And some local officials across the country have resisted state plans to increase housing.

“How many people live with relatives or friends and cannot find a home? The safety net we have is generated by home ownership, and we’re losing it,” said Utah State Rep. Steve Waldrip, a Republican who sponsored recent legislation that gives communities with more affordable housing an easier route to state transportation funding.

New housing permits rise in most states as builders scramble to take advantage of high prices and shortages in popular areas, especially in the south, where most of the increase has occurred . More than one million units were approved, but not necessarily yet built, in the first seven months of 2022, up 34% from the same period in 2019.

Robert Dietz, chief economist for the National Association of Home Builders, questions Freddie Mac’s estimate of the nation’s housing deficit, saying it’s closer to one million units. However, Dietz predicted the deficit will increase this year, citing labor shortages and higher costs for building materials.

“When people say policy ‘X’ will help build more housing, it doesn’t mean anything if there’s no one to build it,” Dietz said. He said construction should start to recover next year, but he predicted it would take at least until 2030 to bring housing supply back into line with demand so prices can come down.

The housing gap is larger for single-family homes, which are more sensitive to high interest rates. By raising interest rates to keep inflation in check, the Federal Reserve will likely dampen the construction of new single-family homes, said Nadia Evangelou, director of forecasting and chief economist at the National Association of Realtors. The association said the country needs an additional 5.5 million single and multi-family units. To construct that many buildings would take a decade, even with accelerated construction.

States that have tried to promote more housing construction are often thwarted by local authorities, who have the most say in what gets built and where, said Alexander Hermann, senior research analyst at the Joint Center for Harvard Housing Studies, which in June reported that a record number of homes are currently being built.

“Clearly, statewide initiatives have the potential to have a much greater impact,” Hermann said.

California has a new eight-year plan that sets a target of 2.5 million new homes, including one million for low-income families, more than double the number in the last plan. Local resistance, however, was fierce. A 2020 state audit noted that some affluent towns, such as Newport Beach, were allocated less than their fair share of affordable housing, just two units, compared to 1,100 for nearby Lake Forest of comparable size. Democratic Attorney General Rob Bonta accused the town of Woodside of trying to evade new housing rules this year by declaring itself a mountain lion sanctuary.

California has stepped up its efforts to enforce local laws requiring zoning for more housing, threatening fines or even court-supervised rezoning.

“Recalcitrant cities are being blown away by court decisions and state enforcement,” said Stephen Levy, director of the Center for Continuing Study of the California Economy, a Palo Alto-based private economics research group. .

Levy said the state’s latest eight-year housing plan was “a disaster,” noting that some Silicon Valley towns have only a small fraction of the low-income housing demanded by the state. by the end of 2022. Cupertino, for example, has permits approved for 19 units against a goal of 563 by the end of 2022, and Sunnyvale has 193 against a goal of 2,555, Levy said.

The housing shortage is so severe that even in Connecticut, known for its local rules that require large lots for single-family homes, state lawmakers are considering changes. Of the 81% of Connecticut land that is zoned for residential use, the governing municipality requires each new home to be on at least 0.92 acres. On 51% of state land, the requirement is nearly two acres, according to a 2021 Cornell University study.

A bill in Connecticut proposed last year, and revived in 2022, would create 10-year state housing plans, dividing responsibility for producing affordable housing among regions in the state. The bill has yet to make it out of committee despite the support of state House Majority Leader Jason Rojas, a Democrat.

Rojas said he would try to bring the bill back next year, saying it was based on similar plans in California and New Jersey.

“We’re going to have to split the baby up and make it a less top-down mandate, which doesn’t fly in a place like Connecticut, which has an affinity for local control,” Rojas said.

The idea faces local opposition.

It would be “very devastating to communities in Connecticut” and would “force an arbitrary allocation of affordable housing to every municipality,” wrote Alexis Harrison, a member of the Fairfield Town Planning and Zoning Commission, in an op-ed.

Waldrip, the Utah state legislator, said localities have raised similar complaints in his state. But, he said, “it’s a serious enough situation that even a Republican free-market state should take it very seriously.”

By one measure, Utah has the fastest housing growth in the nation, approving 34.5 new units for every 1,000 existing units last year, according to calculations provided by Hermann of the Joint Center for Housing Studies. Even so, prices have risen beyond the means of most Utahans.

“I couldn’t believe it when the median home price hit $600,000 in Salt Lake City. I thought I would never see it,” said Dejan Eskic, a housing expert at the University of Utah’s Kem C. Gardner Policy Institute. He said 71% of families in the state can no longer afford the median-priced home in their area, despite a record 40,144 homes approved last year.

Like in many states, Utah experts could see the price issues coming 10 years ago when the population started to explode but home building was still on hold after the bubble burst. real estate in the last 2000s.

“We were licensing less than 10,000 homes, but the population growth didn’t stop and we said, ‘Oh, the prices are about to take off,'” Eskic said.

This story was originally published by Stateline, an initiative of The Pew Charitable Trusts.

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