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The housing shortage isn’t just a coastal crisis anymore

San Francisco, Los Angeles, New York, and Washington have long failed to build enough housing to keep up with everyone trying to live there. And for nearly as long, other parts of the country have mostly been able to shrug off the housing shortage as a condition particular to big coastal cities.

But in the years leading up to the pandemic, that condition advanced around the country: Springfield, Mo., stopped having enough housing. And the same with Appleton, Wis., and Naples, Fla.

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.


Today more families in the middle of the United States 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.

“It’s like the cancer was limited to certain parts of our economic body,” said Sam Khater, chief economist at Freddie Mac. “And now it’s spreading.”

Freddie Mac has estimated that the nation is short 3.8 million housing units to keep up with household formation. Up For Growth, a Washington-based policy and research group focused on the housing shortage, says that deficit doubled from 2012 to 2019. In that time, supply worsened in 47 states and the District of Columbia, according to an Up For Growth report published Thursday. Among 310 metropolitan areas nationwide, supply was dwindling or shortages were growing worse in three-quarters of them heading into the pandemic.

One consequence has been clear during the pandemic: Home prices and rents have soared nationwide, including in places where housing affordability had long been taken for granted.

That’s in large part because demand surged, as households were looking for more space, and as remote work enabled some people to change cities. Historically low interest rates fed the homebuying fever, at a time when millennials were at their peak homebuying years and when investors were expanding their reach in the market.


But that crush of demand mostly landed in communities that were already short on housing. And a housing market with no slack can’t absorb shocks like a pandemic-driven frenzy.

In booming Boise, Idaho, 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 percent 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.

In both real and percentage terms, the shortfalls are more dramatic in some big metros: Los Angeles entered the pandemic needing nearly 400,000 additional homes; Miami, almost 200,000; and Washington about 150,000. Even Phoenix, known as a far easier place to build than coastal metros, had developed a deficit by 2019 of about 100,000 units.

Such numbers are imperfect estimates, responses to a question that can’t be definitively answered: How much housing would you need to build in a given community to maintain a healthy market, one in which renters don’t line up to view available units and homes for sale don’t spark bidding wars?


Any answer depends on some specific assumptions about the right vacancy rate to ensure there’s always some housing available. Or about the number of “missing households” in need of new housing — young adults who’d like to move out of their parents’ homes but can’t afford to or roommates who’d rather live on their own if they could.

There are not, for instance, 400,000 households’ worth of homeless people on the streets of metro Los Angeles. Rather, many people in need of housing there are doubled up with family or living in makeshift garages. A healthier housing market looks like a place where those people would be able to find and afford a home of their own.

“It looks like the ability to live where you want to work,” said Mike Kingsella, CEO of Up For Growth. “It looks like not having to worry about housing instability. It looks like a reasonable chance of eventually buying your own home.”

What’s causing the shortage itself is complex. The homebuilding industry lost about 1.5 million workers in the Great Recession of 2007-’09 and has been in a labor shortage since. Land has grown more expensive. Lending tightened for builders, just as it did for homebuyers after the bubble. The cost of lumber and other materials has risen.

And the sheer difficulty of building a home in many communities makes it all worse. Local residents often oppose new housing. Local governments require development fees, studies, and public meetings that drag out construction and drive up its cost. Through zoning rules, governments also force developers to build on larger lots than some buyers might want and create more parking than buyers might use. And these rules frequently make it impossible to build town houses, duplexes, and apartment buildings.


There is more housing under construction nationwide today than at any time since the 1970s, when many baby boomers were forming households (today’s big construction numbers reflect in part that it takes longer to build a house amid pandemic supply-chain delays). But rising interest rates and fears of a looming recession mean that homebuilders are already starting to pull back, said Robert Dietz, chief economist for the National Association of Home Builders. And even at the current rate of construction, it would take years to dig out of the country’s deficit.