Estimates of the number of missing homes vary widely, but one thing has become clear: While the housing supply shortage is a national problem, solving it is often a local one. In a new report, Fannie Mae economists Kim Betancourt, Stephen Gardner and Mark Palim examine the contours of housing supply for 75 major U.S. metropolitan markets in a way that might offer clues to addressing the housing supply crisis at the local level.
The report found that cost-burdened households are not just in coastal metro areas with high housing costs. Some of the nation’s most significant shares of housing cost-burdened households are in less expensive metro areas such as Miami-Fort Lauderdale-Pompano Beach, Fla. (Miami); Fresno, Calif.; Charlotte-Concord-Gastonia, N.C.-S.C. (Charlotte); and Las Vegas-Henderson-Paradise, Nev. (Las Vegas).
In addition, cost burdens are up even in smaller metro areas. Far-less costly secondary metro areas suffered from negative net migration for several years prior to 2019, such as Bakersfield, Calif.; El Paso, Texas; and McAllen-Edinburg-Mission, Texas (McAllen). As a result, developers were disincentivized from creating new housing, which in turn pushed up overall housing cost burdens.
Addressing housing supply shortages will require different, highly localized strategies. For instance, slightly larger-than-average metro areas with significant levels of population and income growth, where housing expenses have grown faster than the national average and, in turn, have experienced deteriorating affordability, may benefit most from increased development and the creation of more affordable supply. Metro areas with meaningful levels of federal housing subsidies and lower cost burdens among lower-income demographics are prime candidates for multifamily housing preservation. Meanwhile, metro areas with lower-than-average incomes and populations, and even lower growth rates of both, could use more single-family homes, both for ownership and renting.
The supply and affordability problems described in this analysis have likely gotten worse. The analysis relies on 2019 data. Since that year, however, home prices, rent levels and new housing supply constraints have worsened. The supply/demand imbalance has been growing steadily over the past decade. This imbalance intensified since 2020, exacerbating the financial burdens experienced by many households due to the rising cost of renting or owning a home.
Read the full Housing research publication here.