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Zillow Weighs in on Housing Crisis: A Closer Look at the Challenges & Solutions
The housing crisis in our country has reached a critical point, and Zillow has stepped in to shed light on its severity. Many economists have attempted to determine the size of this crisis, with estimates ranging from 2 million to over 6 million homes. Zillow came up with a pretty common-sense approach and the number they came up with was about halfway in the middle, which was 4.3 million homes.
I really like the approach that they took which was based on their search volume and their search portal, alongside assessing the current housing demand. According to their findings, they believe there are 8 million families across the US in need of housing. However, the available housing units are only 3.7 million. So, when you subtract 3.7 million from 8 million, the result is 4.3 million homes that we are currently lacking nationwide, highlighting the pressing challenge we face in the realm of affordable housing. We'll look at the origins of this crisis, the factors escalating the it, and the challenges we must overcome.
How We Ended Up in a Housing Crisis
To understand the genesis of this housing crisis, we need to consider two distinct periods of time. The crisis first began in 2008 following the financial crisis. During this period, banks significantly reduced their lending activities, builders scaled back their construction of new homes, and developers were less involved in creating new communities.
Between 2008 and 2015, we failed to keep up with the pace of family formations, leading to a growing housing deficit that continued to worsen from 2015 to 2021, particularly during the pandemic stages. The demand for housing simply surpassed the available supply during this period. To give you an idea, in 2015, we had a 2.7 million home deficit, but it increased all the way up to 4.3 million by 2021, a 1.6 million increase over that six six-year period. The primary reason for such a large increase was that there were 7.9 million new families that were formed, while only 6.3 million homes were built during that timeframe.
Challenges Facing Housing Affordability
Now we find ourselves in an extremely challenging situation with a 4.3 million homes deficit across the US, according to Zillow. The combination of higher interest rates and insufficient supply to meet the demand is causing housing inflation to persist, preventing prices from becoming more affordable. It's going to take a lot of work and a lot of effort to build our way out of this. Zillow cited several challenges that we must address as a nation to overcome this affordable housing crisis.
One of the key challenges identified by Zillow was the presence of land use restrictions imposed by local governments, along with delays in obtaining building permits. That's one of the things that we've really got to prioritize here in Huntsville, Alabama to prevent us from getting a huge deficit here in our area, we need to expedite building permit and development approval processes for new communities. We also need a lot more affordable housing in terms of multifamily development.
The other challenge, that we don't experience as much here but it is likely to come up, is the "we want affordable housing, but not in my backyard" situation. The challenge is we need more affordable housing. Everybody wants to be able to have a home because we need to have schoolteachers and police officers to be able to afford homes close to the community. But the challenge that a lot of people run into is, yes, I want that, but I don't want that right next to my community because that can affect property values.
It poses a significant obstacle in our quest for increased affordable housing. While there is a collective desire for accessible housing options, allowing schoolteachers and police officers, among others, to reside closer to the community they serve, the issue arises when individuals express concerns about the potential impact on property values if such housing is located right next to their community. Balancing these conflicting interests becomes a critical task in addressing the need for more affordable housing in our community.
That's a sticky challenge that we're going to have to think about as we continue to develop land here in Huntsville to put things to the best use and also protect everybody's best interest. If you’re looking to buy or sell a home in Huntsville, Alabama, shoot us an email at moving@mattcurtisrealestate.com or contact us here.
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