The nationwide shortage of rental and owner-occupied properties is 1.5 million units, and the current pace of construction is not keeping up with demand. This lack of adequate housing supply leads to higher prices for renters and homebuyers alike, forcing some into homelessness and preventing others from becoming homeowners.
A complex mix of economic and bureaucratic factors is hampering efforts to improve the situation. On a macroeconomic level, relatively high interest rates and inflation are prompting current homeowners to stay where they are, which contributes to low vacancy rates. Additionally, rising materials costs, lengthy permitting processes, construction workforce shortages and restrictive zoning regulations are significant cost drivers. Although all types of new housing create capacity in the market, the current pace of construction is not enough to keep up with demand.
To help meet the demand for more housing, some legislatures are revising zoning regulations, streamlining administrative processes and incentivizing construction of more affordable housing options.