The issue of housing affordability in the United States has been widely attributed to a shortage of homes. However, a recent study conducted by Kirk McClure and Alex Schwartz challenges this narrative. Their analysis, spanning from 2000 to 2020, reveals that housing production has often outpaced household growth, raising questions about the fundamental assumptions underpinning real estate investment strategies.
McClure, a professor emeritus at the University of Kansas and co-author of the study, discusses how their research shows overall housing units increased by 21.2%, while household formation grew by 20.3%—outpacing population growth of 17.8%. The findings suggest that only a small fraction of metropolitan areas—19 out of approximately 760—exhibit what could be classified as a genuine housing shortage.
Despite these statistics, McClure notes that affordability issues persist. He argues that lower household incomes rather than a dearth of housing units are driving the affordability crisis. Many potential renters, particularly younger generations burdened with student debt, are unable to secure housing, leading to a perception of scarcity even in markets with available homes.
Critically, while some reports from organizations like Freddie Mac cite a housing shortage starting in 2010, McClure argues that this timeframe coincided with the aftermath of the Great Recession and thus skews perceptions regarding housing availability.
As debates continue over the optimal approach to addressing affordability, McClure advocates for expanding rental assistance programs rather than focusing solely on increasing housing supply. He contends that existing programs could better serve low-income individuals who struggle to afford current rents.
Why this story matters:
- It highlights the nuanced dynamics of housing markets beyond the oversimplified shortage narrative.
Key takeaway:
- Affordability is more closely tied to income levels than to the availability of housing units.
Opposing viewpoint:
- Many analysts maintain that increasing housing supply is essential for long-term affordability solutions.
