Affordability crisis: United States needs 4.3 million more homes

Gap between families and available homes widens and likely continues to grow

• A lack of affordable homes has created millions of "missing households," keeping families in shared homes and unable to strike out on their own
• More than two-thirds of these missing households earn less than $35,000 a year, highlighting the economic barriers many face when trying to find a place of their own

SEATTLE, June 22, 2023 /PRNewswire/ -- 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.

What consumers need to know
Zillow has a number of tools and partnerships to help consumers overcome these challenges.

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.

What policymakers can do
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

 

Sources and Methodology
This study uses the American Community Survey to provide a simple count of the number of families living in other families' housing units. The number of families that do not currently own a home is estimated from IPUMS USA by counting each family in each household using the FAMUNIT variable and the appropriate weights. There can be multiple families either living in rented households or living in owner-occupied homes. To estimate the housing unit deficit, we compare families that were living in another family's home with the number of units for sale or for rent across the country in the same time period.

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, great partners, and easier buying, selling, financing and renting experiences.

Zillow Group's affiliates, subsidiaries and brands include Zillow®; Premier Agent®; Zillow Home Loans℠; Zillow Closing Services℠; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+℠, which includes ShowingTime®, Bridge Interactive®, and dotloop®.

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).  © 2023 MFTB Holdco, Inc., a Zillow affiliate.

¹ Latest sample available of the U.S. Census Bureau's American Community Survey

 

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SOURCE Zillow