Affordability Crisis: United States Needs 4.3 Million More Homes, Phoenix Needs 87,000

inbusinessPHX.com

A significant shortage of affordable housing options is fueling America’s affordability crisis, particularly for those looking to move out on their own for the first time, a new Zillow analysis shows. This huge housing deficit underscores the need for policies and investments that can boost construction. 

This lack of housing — especially affordable options — has left millions of households “missing.” These missing households consist mainly of individuals and families living in another family’s owned or rented home. Across the country in 20211, there were nearly 8 million missing households, compared to just 3.7 million housing units available for rent or sale, a deficit of 4.3 million homes.

“The U.S. housing market is like a high-stakes version of the game musical chairs,” said Orphe Divounguy, senior economist at Zillow. “There are simply not enough homes for millions of people. Unless we address the shortage of smaller, more-affordable, starter-type homes, we risk leaving families without a seat — and it will only get worse over time.”

For each of the 3.7 million housing units available for rent or sale across the country in 2021, there were more than two potential households — families likely in need of their own homes. This means even if every missing household was willing and able to move into their own home, 4.3 million households would have been left without a place to move to.

The bulk of families doubling up have consistently lower incomes, highlighting the need for smaller, more affordable housing. Of the families that are doubling up, 68% had an annual income of $35,000 or less.

The mismatch between potential housing needs and available homes across the country is playing out in dramatic fashion in the most expensive coastal housing markets, such as Los Angeles, San Francisco, San Jose, San Diego and Boston but also in places like Boise.

Zillow’s affordability calculator and monthly payment filter can help shoppers better understand how much they can afford and how best to find an affordable mortgage payment. Working with a trusted real estate partner is also critical to helping find an affordable home for new buyers.

All home listings on Zillow display available programs that help eligible shoppers with a down payment — the biggest barrier to homeownership for most. This first-of-its-kind tool was used by more than 1 million customers in just its first year, with the average recipient qualifying for $17,000 towards a down payment.

And for renters, Zillow offers a single, flat-fee rental application tool that helps would-be-tenants avoid paying hundreds of dollars in application fees, which can quickly become a financial hardship for low-income families.

Construction productivity has been declining relative to the rest of the U.S. economy since the late 1960s, with land-use restrictions, building approval delays, and stunted construction sector growth all contributing to the lack of new home construction across the country. Policymakers should explore ways to boost production and overall growth of the construction sector to ensure housing supply can catch up to demand.

Additionally, experts are near unanimous that loosening restrictive zoning laws is critical to creating more supply and easing housing costs. According to public polling conducted by Zillow, four out of five adults support allowing more, smaller home types to be built in their own neighborhoods. Researchers also suggest that speeding up building permitting, eliminating parking requirements, tax incentives to rehabilitate underutilized housing stock, and expanding affordable housing trust funds could all help ease the shortfall in new construction.

Metropolitan Area* Housing Unit
Deficit (2021)
Missing Households
(2021)
Total Units for Sale
or Rent (2021)
Mortgage Burden
with 10% Down
Payment (May 2023)**
Rent Burden
(May 2023)**
United States 4,283,926 7,967,749 3,683,823 37.7 % 31.5 %
New York, NY 376,376 561,810 185,434 53.4 % 42.0 %
Los Angeles, CA 333,862 446,105 112,243 84.2 % 39.6 %
Chicago, IL 87,433 191,542 104,109 29.9 % 28.4 %
Dallas, TX 47,622 153,027 105,405 37.9 % 26.0 %
Houston, TX 16,397 128,220 111,823 34.0 % 26.3 %
Washington, DC 133,971 192,375 58,404 38.2 % 22.9 %
Philadelphia, PA 64,789 127,443 62,654 33.4 % 25.8 %
Miami, FL 60,057 140,624 80,567 55.7 % 48.8 %
Atlanta, GA 63,467 133,929 70,462 39.0 % 29.3 %
Boston, MA 151,765 184,200 32,435 50.7 % 33.6 %
Phoenix, AZ 86,996 132,340 45,344 47.4 % 29.6 %
San Francisco, CA 161,581 204,028 42,447 74.0 % 29.2 %
Riverside, CA 72,354 106,054 33,700 59.5 % 39.2 %
Detroit, MI 35,159 73,183 38,024 28.5 % 23.5 %
Seattle, WA 108,858 142,787 33,929 56.5 % 25.4 %
Minneapolis, MN 76,595 101,083 24,488 34.4 % 21.8 %
San Diego, CA 94,494 120,535 26,041 76.1 % 38.7 %
Tampa, FL 28,087 73,710 45,623 46.8 % 38.0 %
Denver, CO 69,693 96,785 27,092 53.1 % 26.1 %
Baltimore, MD 34,127 67,401 33,274 32.4 % 22.4 %
St. Louis, MO 13,177 45,700 32,523 27.5 % 22.1 %
Orlando, FL 15,355 68,161 52,806 44.2 % 33.8 %
Charlotte, NC 17,805 48,308 30,503 40.8 % 28.6 %
San Antonio, TX 14,637 48,585 33,948 35.7 % 26.1 %
Portland, OR 76,717 95,749 19,032 54.0 % 25.7 %
Sacramento, CA 63,749 79,075 15,326 54.7 % 31.4 %
Pittsburgh, PA 17,094 44,585 27,491 24.9 % 24.9 %
Cincinnati, OH 31,032 48,834 17,802 30.2 % 24.0 %
Austin, TX 56,745 80,984 24,239 44.8 % 24.8 %
Las Vegas, NV 26,456 63,638 37,182 49.5 % 31.6 %
Kansas City, MO 26,360 46,999 20,639 31.9 % 21.6 %
Columbus, OH 33,399 51,940 18,541 33.9 % 24.0 %
Indianapolis, IN 14,207 38,417 24,210 30.9 % 24.6 %
Cleveland, OH 13,620 37,484 23,864 27.5 % 25.4 %
San Jose, CA 60,895 77,620 16,725 81.1 % 26.4 %
Nashville, TN 34,909 60,829 25,920 46.1 % 29.0 %
Virginia Beach, VA 17,589 40,936 23,347 37.5 % 26.7 %
Providence, RI 22,606 38,509 15,903 46.6 % 29.8 %
Jacksonville, FL 14,373 33,192 18,819 42.9 % 30.4 %
Milwaukee, WI 12,762 31,375 18,613 36.9 % 21.2 %
Oklahoma City, OK 11,669 33,848 22,179 29.5 % 24.6 %
Raleigh, NC 16,976 31,461 14,485 40.0 % 23.5 %
Memphis, TN 3,098 21,070 17,972 33.7 % 30.6 %
Richmond, VA 15,389 28,394 13,005 36.2 % 23.0 %
Louisville, KY 8,051 24,876 16,825 29.5 % 22.2 %
New Orleans, LA 3,012 21,152 18,140 32.0 % 31.3 %
Salt Lake City, UT 28,098 38,280 10,182 52.7 % 23.6 %
Hartford, CT 13,445 25,704 12,259 33.0 % 25.1 %
Buffalo, NY 13,341 24,838 11,497 32.3 % 24.1 %
Birmingham, AL 3,237 19,145 15,908 30.3 % 25.3 %
* Ordered by market size
** Mortgage and rent burdens show the share of a median household’s income needed for the typical monthly mortgage or rent payment in each metro area

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