Freddie Mac released “The Housing Supply Shortage: State of the States,” which finds that 29 states and the District of Columbia have a housing undersupply. TShe largest deficits of housing supply were found in the District of Columbia (with a deficit of 9.55%), Oregon (8.8%), and California (5.74%).
This state-level analysis is a follow-up to a December 2018 report that found that the housing market had not fully recovered from the Great Recession and that the nation’s housing supply was not meeting demand. In the previous report, Freddie Mac estimated a housing shortage of 2.5 million homes. This new report accounts for state-level variations and estimates the housing shortage on the basis of each state’s needs (since a surplus of housing on one side of the country does not compensate for deficits on the other). On the basis of this analysis, 29 states have a housing deficit, and the national deficit is 3.3 million homes.
The author uses U.S. Census Bureau data to estimate housing supply, which includes single-family homes, apartments, and manufactured homes in each state. The author estimates housing demand with a formula that considers (1) long-term vacancy rates and (2) an estimate of the target number of households if housing-cost constraints did not limit the formation of new households.
Freddie Mac estimates that over 400,000 additional households headed by 25- to 34-year-olds would have formed in 45 states and the District of Columbia, were it not for high housing costs that resulted in them choosing shared living arrangements or choosing to continue to live with their parents. These potential households are considered “missing households.” In general, states with lower vacancy rates have proportionally more missing households.
Subtracting estimated housing demand from housing supply provides an estimate of the housing deficit. Five states (Oregon, California, Minnesota, Florida, and Colorado) and the District of Columbia have a deficit of more than 5%, and 24 other states have an undersupply. The report estimates that 21 states are oversupplied, with the greatest oversupply in West Virginia and Arkansas. (It is worth emphasizing that this estimate does not take affordability and availability into consideration. NLIHC’s report The Gap: A Shortage of Affordable Homes estimates that extremely low-income renters face a shortage of 7 million affordable and available homes nationwide, including a shortage of more than 24,000 affordable and available homes in West Virginia and a shortage of more than 55,000 affordable and available homes in Arkansas. Adequate housing exists, but extremely low-income renters cannot afford it.) Finally, the report estimates the impact of migration on states’ housing deficits.
The report can be accessed at: https://bit.ly/2Why0Ne