While it’s a widely held view that the United States is grappling with a housing shortage—a notion even driving national policy under the Biden administration’s efforts to tackle the perceived lack of housing supply—recent findings from the University of Kansas suggest a different scenario. The study, spearheaded by Kirk McClure, professor emeritus of public affairs & administration at KU, alongside Alex Schwartz of The New School, paints a picture not of a shortage in housing numbers but a critical lack of affordable units for lower-income households. Their research, detailed in the journal Housing Policy Debate, utilised U.S. Census Bureau data spanning two decades, from 2000 to 2020, to compare new households with new housing units. The analysis revealed a significant imbalance, with just four of the nation’s 381 metropolitan areas and 19 of the 526 micropolitan areas experiencing a housing shortage within the study period.

The researchers’ examination of household income categories—exceptionally very low income (30% to 60% of area median family income) and meagre income (below 30% of area median family income)—highlighted the growing disparity. Despite a surplus of 3.3 million housing units created from 2000 to 2020, household formation surpassed the number of available homes in the last decade, suggesting a shift in the type of housing demand, primarily driven by affordability issues rather than sheer availability. This surplus in the earlier decade had compensated for the later shortfall.

Their findings indicate that while nearly all metropolitan areas have adequate housing for homeowners, there needs to be more rental units affordable to very low-income earners. The national total vacancy rates, which stood at 9% in 2000, rose to 11.4% by 2010 at the height of the housing bubble and the Great Recession and slightly reduced to 9.7% by the end of 2020, also shed light on housing availability. These rates suggest a considerable number of vacant units, yet availability is more complex, encompassing factors such as habitability and cost, which can restrict accessibility to suitable housing.

The detailed analysis of different housing markets across the country revealed a national surplus of 2.7 million housing units over households in the studied period for metropolitan areas, with micropolitan areas showing a smaller surplus of around 300,000 units. The researchers also delved into housing affordability, noting that shortages only became apparent in data concerning renters, particularly those earning between 30% to 60% of the median family income—a bracket roughly aligning with federal poverty levels and eligibility for rental assistance. The study found that only two metropolitan areas had a deficit of units for very low-income renters, illustrating the selective nature of housing shortages.

McClure and Schwartz argue that enhancing the affordability of existing housing through federal assistance programs and addressing income levels could be more effective and economical than expanding construction in hopes of reducing housing prices. This approach aligns with their findings that the primary barriers to housing affordability in the U.S. stem from high housing costs met by insufficient incomes rather than a straightforward shortage of housing units. Their insights challenge the prevailing narrative and suggest that policy focus should shift towards financial accessibility rather than merely increasing housing stock. This nuanced understanding could guide more targeted and effective interventions to address the complex issue of housing affordability in the United States.

More information: Kirk McClure et al, Where Is the Housing Shortage? Housing Policy Debate. DOI: 10.1080/10511482.2024.2334011

Journal information: Housing Policy Debate Provided by University of Kansas