The ‘ever-worsening affordability crisis’ in housing came from decades of underbuilding, industry group says

Construction housing
Construction workers build homes on a lot in Vaughan, a suburb with an active real estate market, in Toronto, Canada, May 24, 2017. Mark Blinch/Reuters
  • The National Association of Realtors stressed the urgency of addressing the housing shortage in a report.
  • It cited decades of underbuilding for the current “affordability crisis” that is just getting worse.
  • Building would need to increase by 60% to make up for the lack of available housing, it said.
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Even the people who want to sell you a house think it’s too expensive.

The severe housing shortage in the US – caused by an underinvestment in housing construction – has led to spiking rent and home prices, and an “affordability crisis.” That’s the official opinion of the organization that represents 1.3 million realtors nationwide.

The National Association of Realtors (NAR) released a report last month, written by members of the Rosen Consulting Group, that examined the impact that decades of underbuilding has had on the housing market. It found the gap between housing supply and demand is “enormous,” and a widescale national committement is needed to address it – and to establish new housing construction as a critical infrastructure investment.

“The housing stock around the nation has been widely neglected, with a severe lack of new construction and prolonged underinvestment leading to an acute shortage of available housing, an ever-worsening affordability crisis and an existing housing stock that is aging and increasingly in need of repair – all to the detriment of the health of the public and the economy,” the report said.

The report noted that while housing stock grew at an annual rate of 1.7% from 1968 to 2000, it grew by an annual rate of 1% over the past two decades, and just 0.7% over the past decade, resulting in an underbuilding gap of over 5.5 million units in the past 20 years.

And in order to fill that gap, as the report said, building would need to accelerate well above its current trend, to more than 2 million housing units per year, which would mark a near 60% increase.

The lack of available housing isn’t the only issue. Given the tight supply, the prices on available housing are increasing, putting homeownership out of reach for many. So much so, in fact, that the number of adults living at home with parents more than doubled from 2000 to 2020, increasing by 4 million people, and even before the pandemic, nearly one quarter of renters were “severely burdened,” or spending over half their income on housing, according to the report.

The report recommended increased funding options, changes in zoning to fit more housing units in smaller spaces, and getting the federal government involved to help with rising costs and material shortages.

Insider previously reported that housing organizations, like the National Association of Home Builders, have called on the government to step in and help remedy material shortages that are contributing to the housing crisis, particularly with lumber, and their calls may have been answered.

Last week, Commerce Secretary Gina Raimondo and Secretary of Housing and Urban Development Marcia Fudge met with builders and housing advocates to discuss high prices and material shortages, suggesting these topics could become a focus of President Joe Biden’s agenda.

“There is a strong desire for homeownership across this country, but the lack of supply is preventing too many Americans from achieving that dream,” Lawrence Yun, NAR’s chief economist, said in a statement. “It’s clear from the findings of this report and from the conditions we’ve observed in the market over the past few years that we’ll need to do something dramatic to close this gap.”