5 Reasons Why There Isn’t A Housing Shortage

The United States is experiencing declining population growth, with fewer than one million people added in 2021, a slower rate compared to historical events like the Spanish flu pandemic and World War 1. Single-family home permits have plummeted since 2005, dropping by 70% to 400k in 2010. Even in 2020, permits remained low at 1 million. However, analyzing the population growth to new housing permits ratio reveals a concerning trend. The ratio, which ideally should be around 1.5, dipped below this threshold in the mid-2000s and again in 2020, indicating a potential oversupply rather than a shortage.

Moreover, the average number of people per housing unit remains relatively low, around 2.49, suggesting that there isn't significant pressure on housing availability. Despite this, investors have been purchasing homes at a record rate, particularly in metropolitan areas, potentially driving up prices. Low interest rates over the past few decades have contributed to rising home prices, making buying more attractive than renting and increasing demand.

Additionally, there's a mismatch between housing supply and demand in different locations, with some areas experiencing high demand while others have plenty of vacant houses. The shift towards remote work has exacerbated this issue, allowing individuals to move to areas with lower living costs while maintaining their salaries from high-cost cities like New York.

Belinda Carr undertook extensive research on the crisis known as the "housing shortage" from multiple sources. Subsequently, she crafted a video presentation and penned the accompanying summary.

Declining Population Growth

According to the US Census Bureau, the country’s population grew by fewer than one million people in 2021, slower than during the Spanish flu pandemic of 1918 and World War 1. Permits for single-family homes declined from a peak of 1.7 million in 2005 all the way down to 400k in 2010, a massive 70% drop. Even in 2020, the number of permits issued was only 1 million, far lower than 2005. However, overlaying this graph with the population growth graph tells a very different story.

Population / Permitting Ratio

The ratio of population growth to new housing permits should be around 1.5, 1.5, meaning 1.5 people added for every 1 permit. In the mid-2000s, right before the last housing crash, the Population / Permitting Ratio dipped below 1.5. 15 years later, we’re back in the same danger zone. 0.8 people were added in 2020 for every 1 permit. For the first time in US history, more units were permitted than the population grew. This means that we’re heading towards oversupply, NOT a shortage.

The Number Of People Per Unit

When times get tough and there’s a true housing shortage, people turn to shared housing to help make ends meet. If we were truly facing a housing crisis, the number of people per unit in the States would be extremely high, between 5 and 8 people per house, not 2.49.

The Number Of Rental Units

According to Redfin, investors purchased a record $64 billion worth of homes in 2021, the most in at least two decades. That’s an average of 15% of homes sold in many metropolitan areas. The percentage is much higher in certain cities like Washington, Atlanta, Charlotte, Miami, Jacksonville and Phoenix where 25% of homes were bought by investors.

Low Interest Rates

Over the last 30 years, low interest rates have driven up home prices. From 2008, up until 2021, the 30 year fixed rate mortgage was below 6%, a historic low. No money down, ultra-low interest rates, and easy qualification gave individuals the ability to buy much more home for their money. It was also cheaper to buy as opposed to rent, which created additional demand.

Mismatch Of Housing Types And Locations

Trendy markets like Miami, Denver, Atlanta and Austin have an out of control demand for housing, while other places like Detroit still have plenty of vacant houses. The work from home revolution over the past 2 years has exacerbated the problem. Currently someone with a salary from New York can move to Denver with the NY salary, buy a house, and save substantial money.

Conclusion

The findings presented by Belinda Carr, supported by facts from diverse sources, seem to align with common sense.

Observers have remarked that they don't believe 19 Canal Street Apartments are currently fully occupied. The construction of that property finished months ago, and the activity in the parking lot during late evening and early morning hours appears to support the conclusions being made by observers. As Millbury is not a major metropolis, our housing requirements differ in nature, however, the findings provided still apply to some magnitude. Most locals don't perceive the rental housing options in the recently constructed apartment complexes, particularly Cobblestone Village Apartments with 72 units and 19 Canal Street Apartments with 59 units, developed by Steven Venincasa and James Venincasa, in Millbury as particularly affordable. Steven Venincasa attempted to convey that he is an struggling builder and views these projects as his retirement strategy.

Simply grasp the objectives of Chapter 40B, the MBTA Communities Act, and the pending Affordable Homes Act. Chapter 40B stipulates that 25% of units must be “affordable,” with the remaining 75% leased at market rate. Conversely, the MBTA Communities Act imposes no requirement for affordable housing units and sets a maximum limit of 10% for such units. The pending Affordable Homes Act, if enacted, would reduce a community's Subsidized Housing Inventory (SHI) percentage with the addition of housing units. Who is propagating the housing scarcity narrative? Developers? Investors? Campaign contributors? It appears to be those who stand to gain from the "housing shortage narrative."

The town of Millbury's expansion should be strategic and in accordance with the town's master plan, zoning bylaws, and other local regulations, which these large-scale developments do not adhere to. State mandates shouldn't impose one-size-fits-all solutions, as they often fail to recognize the unique characteristics of different communities and the reasons why people choose to reside in them.