The Only Thing That Will Fix a Housing Shortage Is More Housing
Kelly Wong, February 10, 2015
A shortage of affordable housing has been a huge problem for urban areas, and a recent pair of charts from Trulia’s chief economist really highlights a big issue with housing development in the US. For the past few years, housing development has grown the most in suburbs and less in urban areas, but the price of housing in urban areas is rising the fastest. Basically, the housing supply in urban areas is not growing quickly enough to meet demand.
This problem has been illustrated perfectly in San Francisco. The city’s population has grown rapidly, but the growth in its housing stock has lagged behind. Since 2010, the population of San Francisco has increased by 45,000 people, but the housing stock has only increased by 7,500 units. With that kind of population growth and the relatively meager amount of housing development, it’s really no surprise that housing prices in the city have skyrocketed.
A similar phenomenon is happening in San Diego, which was recently named America’s least affordable city by Realtor.com. San Diego is slated to have 590,000 more people by 2050, and the only way to accommodate all these new residents is to increase the city’s density and develop more housing.
Developing more housing is what Austin did in response to its growing population, and it’s had some promising results so far. Though the cost of housing in Austin rose for the past several years, the addition of 10,000 new units to the area last year seems to have somewhat stabilized rents. The occupancy rate in the Austin area dropped by 4% down to 94% last year, the lowest it has been since 2012. While we have to see how the housing stock will hold up over the years, it’s no question that some cities, like San Francisco, would probably benefit from an increase in housing development.