SPRINGFIELD, Mo.–While the shortage of affordable housing has largely been associated with large coastal cities such as New York and San Francisco, the crisis is now becoming an issue in mid-America markets such as Springfield, Mo., and Appleton, Wis., according to a new report.
For credit unions, it is yet another challenge—and opportunity—in helping members to lead better financial lives.
“What once seemed a blue-state coastal problem has increasingly become a national one, with consequences for the quality of life of American families, the health of the national economy and the politics of housing construction,” noted the New York Times in its report. “Today more families in the middle of America who could once count on becoming homeowners can’t be so confident anymore. And communities that long relied on their relatively affordable housing to draw new residents can no longer be so sure of that advantage.”
Nearly 4-Million Units Needed
The Times analysis reported Freddie Mac has now estimated that the nation is short 3.8 million housing units to keep up with household formation.
Up For Growth, meanwhile, a Washington-based policy and research group focused on the housing shortage, says that deficit doubled from 2012 to 2019, the Times added.
“In that time, supply worsened in 47 states and the District of Columbia, according to an Up For Growth report…” the report added. “Among 310 metropolitan areas nationwide, supply was dwindling or shortages were growing worse in three-quarters of them heading into the pandemic.”
Markets Feeling the Strain
Among the markets that are feeling the strain:
- Booming Boise, Idaho, which Up for Growth estimated that the region already had a shortage of more than 13,000 housing units in 2019, using government data on housing and household formation. That’s equivalent to about 5% of the region’s housing stock.
- Athens, Ga., and Pensacola, Fla., had more than enough housing a decade ago, according to the analysis. By 2019 those cushions had vanished, the Times said.
- Other markets that have lost their surpluses include Punta Gorda, Fla.; Hilton head Island/Bluffton, S.C.; Cape Coral/Ft. Myers, Fla.; Muskegon, Mich.; Auburn-Opelika, Ala.; New Orleans, Las Vegas and more.
Chris Herbert, managing director of the Harvard Joint Center for Housing Studies, told the New York Times that exacerbating the issue is that more higher-income households compete for limited housing, prompting builders to build high-end homes.
Other Contributors
Also contributing to the shortage, the Times reported:
- The home-building industry lost about 1.5 million workers in the Great Recession of 2007-9 and has been in a labor shortage since.
- Land has grown more expensive. Lending tightened for builders, just as it did for home buyers after the bubble. The cost of lumber and other materials has risen.
- Local residents often oppose new housing. Local governments require development fees, studies and public meetings that drag out construction and drive up its cost, the report pointed out.
More Houses Being Built, But…
According to Robert Dietz, chief economist for the National Association of Home Builders, there is more housing under construction nationwide today than at any time since the 1970s, when many Baby Boomers were forming households.
But rising interest rates and fears of a looming recession mean that home builders are already starting to pull back, Dietz added, noting that even at the current rate of construction, it would take years to dig out of the country’s deficit, the Times reported.