In the past 20 years, new housing construction lagged 5.5 million units behind historical levels, according to a report by the National Association of Realtors.
The trade group is now lobbying for a “once-in-a-generation” policy response from the Biden administration and Congress to make up the gap, the Wall Street Journal reported.
On average, 1.225 million housing units were built each year from 2001 to 2020, according to the NAR report, down from 1.5 million units between 1968 and 2000. The deficit has left the country 5.5 million units short.
“We need affordable [housing], we need market-rate, we need single-family, we need multifamily,” David Bank, senior vice president of Rosen Consulting Group and one of the report’s authors, told the Journal.
In particular, NAR found construction is short by two million single-family homes, one million two-to-four-unit buildings, and more than two million buildings with at least five units.
When taking into account aging or destroyed units, as well as household-formation growth, construction was closer to 6.8 million units short of necessary levels.
Compounding the problem for house hunters, few places are for sale. Existing-home inventory dropped almost 21 percent annually to just 1.16 million units at the end of April. With demand high, the median home cost almost 20 percent more in April than it did the year before.
Despite the sobering numbers, not everyone is convinced there’s a crisis. The birth rate is low and immigration fell during the Trump administration.
“Our adult population isn’t growing as fast as it used to,” John Burns, chief executive of John Burns Real Estate Consulting, told the publication. Now, “we don’t need to build as much,” he said.
Builders have attempted to speed up construction, but can’t find enough land, workers, or materials. They will need to build 1.5 million new units a year to close the existing deficit, according to NAR. Even if annual construction rates matched their recent peak of 2.1 million homes, it would still take a decade to fill the gap of 5.5 million dwellings, according to the report.
In response, NAR is requesting expanded tax credits for low-income rentals. It also wants federal funding to encourage localities to allow more housing density. In addition, the group calls for renovation of distressed properties and commercial-to-residential conversions.
[WSJ] — Joe Lovinger