Many Americans searching for a home are finding it increasingly difficult to secure one. In 2023, the U.S. faced a shortfall of 4.7 million compared to the number of households seeking them. Despite the addition of 1.4 million new houses to the market, the shortage actually grew by 159,000 units from the previous year.
“The deepening housing deficit remains the prime driver of the nation’s housing affordability crisis,” a new analysis by Zillow stated.
The shortage had its origins in the Great Financial Crisis of 2008, which led to two decades of underbuilding, according to the real estate marketplace. Recently released Census data showed that in 2023, 3.4 million homes sat vacant and available for rent or sale, with affordability a major factor. “A family earning the median household income could afford to buy a typical home in 2019 – now they would need a $17,000 raise,” Zillow stated. Yet, it noted, even in 2019, nearly twice as many families were sharing homes with non-relatives compared to the number of homes available to buy or rent.
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The $17,000 figure refers to the national median. In many cities, however, a far greater income hike would be required. For example, in New York, with a deficit of 402,361 homes, it would take a raise of $99,343 to afford the typical home. In Providence, RI, with a 29,791-home deficit, it would take a hike of $50,418. In Milwaukee, it would require another $36,519, in Denver $43,588, in Boston $78,503, in Portland, OR $48,708 and in Salt Lake City $40,038. Then there are the usual California outliers, including San Jose ($251,197 required), San Francisco ($165,566), Los Angeles ($149,375), and San Diego ($128,954). These California metros, along with Boston, also had the nation’s worst housing shortages.
While house building has risen sharply in the past five years, the report said the surge has merely slowed the growth of the deficit, but not reversed it. For example, the 1.4 million new homes added in 2023 did not keep pace with the addition of 1.8 million newly formed families. In 2024, 1.63 million units were completed – a record since 2007.
In 2023, 8.1 million families shared their homes with people who weren’t related to them. Of the families in this situation, 38% were millennials – the biggest contingent. The next largest group was Gen Z at 29%, followed by Gen X at 17%, and baby boomers and older generations at 16%.
According to Zillow, the best way to address the shortages is to relax zoning laws to raise density and make housing more affordable. “More of these measures at the local level can help get more homes built and begin to ease this outsize financial burden for millions of Americans,” said senior economist Orphe Divounguy.
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