Unpacking the Housing Shortage Puzzle
Stop us if you’ve heard this one before. “Housing prices continue to rise despite the fact that markets have mostly recovered … we are just not producing enough new housing to keep up with demand.” Analysts at Brookings Metropolitan Policy Program looked at this phenomenon last year.
The growth in the housing stock is the sum of new production less the amount of housing that is exiting the stock. The authors describe the ratio between these two numbers as “churn.” Churn is highest in rural areas, where many homes are leaving the stock due to age and condition. Suburbs had the biggest variance between additions and losses, and the highest net housing growth. Urban areas saw significant “additions” through mechanisms other than new production—accessory apartments, for example.
The operation of housing markets is complex, but one takeaway from the study is that: “We can’t indefinitely rely on new construction of low density, single family housing to accommodate population growth … for housing supply to grow, more localities need to update their zoning, buildings codes and property taxes to allow and incentivize higher density.”
One more thing. The single largest component of housing loss in suburbs and rural areas were mobile homes… more on that in a future microblog.
Don’t want to miss a post? Sign up here to get the microblog delivered directly to your inbox every Thursday.