Will the U.S have a severe housing shortage someday?
CHICAGO – Feb. 1, 2019 – The nation's housing stock is getting older and new-home construction is failing to keep pace. That could add up to severe housing shortages as well as a growing share of homes that have not stayed up to code or current safety standards, economists warn.
Laurie Goodman of the Urban Institute estimated in an April 2018 article that the supply of new homes in 2017 was falling about 350,000 short of the level needed to meet demand. That has kept pressure on keeping older homes in the pipeline longer, the National Association of Home Builders notes on its Eye on Housing blog.
Only slightly more than 6 out of every 1,000 homes built prior to 1970 are removed from the housing stock each year, the NAHB says.
"In the long run, loss rates as small as this are not sustainable, of course, as that would imply half of new homes built in some regions last 1,000 years," NAHB researchers note in the blog post. "But in the medium term, it may be possible to keep removal and production rates as low as they are right now."
The future is murky for the housing stock.
If homebuilding continues to perform at the same low levels by historical standards, within 20 years only 16 percent of the housing stock would consist of new homes built in that time. Forty-five percent of homes would then be built before 1970, and that figure could be as high as 65 percent in some parts of the United States, like the Northeast), the NAHB notes.
The result could be that many homes will not be up to code. In the 1970s, no codes or standards existed for energy efficiency, for example. Many code changes for fire safety also came after 1970.
"New homes are being built to higher standards than they were in 1970," the NAHB notes on its post. "So if you want to improve the built environment, one of the first things you need to do is figure out simply how to increase the production of new homes, built to modern standards, so it becomes possible to retire more of the older homes."
NAHB's full analysis on the aging housing stock is posted online.
Source: "More Homes Needed to Replace Older Stock," National Association of Home Builders' Eye on Housing blog (Jan. 24, 2019)
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