Housing shortfall roughly equal to U.S. population growth.

“The conundrum affordable housing poses for the nation” (Washington Post, January 2, 2020):

A severe shortage of homes for working-class and low-income families is pushing up house prices and rents across the country, putting homeownership increasingly out of reach for many Americans and making rents so high that it is all but impossible for renters to save. With the presidential election fast-approaching, the candidates should explain what they plan to do about it.

I.e., only government can save us!

Half of families who rent and nearly one-fourth of home owners pay more than 30 percent of their monthly income toward their housing costs, a level widely considered unsustainable.

After purchasing essentials, including food, clothing and utilities, the families have little left to cover the cost of health care, bridge the gap during a change in jobs or bear an unforeseen bill of any amount. And forget about saving for retirement or a child’s education.

Fueling the rapid rise in rent and house prices is a severe lack of housing supply.

What’s the shortfall ?

Nationwide, the percent of houses that are vacant has fallen to a more than 35-year low, translating into a shortfall of an estimated 1.6 million new houses.

This gap is increasing by about 300,000 units each year, as builders are putting up close to 1.4 million new dwellings yearly, including single-family houses, apartments and manufactured housing. But the yearly demand for new housing, largely from new households and dwellings needed to replace those lost in natural disasters and to old age, is consistently near 1.7 million units.

Trump is to blame, it seems…

The Trump administration’s immigration policies aren’t helping, as builders can’t find the immigrant workers they need, 

But Pew says that it is immigrants and children of immigrants that are responsible for all US population growth:

Foreign-born Americans and their descendants have been the main driver of U.S. population growth, as well as of national racial and ethnic change, since passage of the 1965 law that rewrote national immigration policy. They also will be the central force in U.S. population growth and change over the next 50 years.

Regardless of the source of the growth, what is the size? The Google says our population grows at 0.7 percent per year, so that’s roughly 2.3 million additional Americans annually (more than triple the population of Boston proper!). If we have some big families, 7 people per household, the 300,000-unit shortfall in housing is roughly equal to the population growth.

23 thoughts on “Housing shortfall roughly equal to U.S. population growth.

  1. “If we have some big families, 7 people per household, the 300,000-unit shortfall in housing is roughly equal to the population growth.”

    From your article/ and/or quotes: “This gap is increasing by about 300,000 units each year, as builders are putting up close to 1.4 million new dwellings yearly, including single-family houses, apartments and manufactured housing. But the yearly demand for new housing, largely from new households and dwellings needed to replace those lost in natural disasters and to old age, is consistently near 1.7 million units.”

    The 1.4 million new dwellings would include these categories:

    1. Replacement of abandoned and damaged dwellings.
    2. Adding housing in areas with high demand that people are moving to, i.e. Texas/Florida/Arizona.
    3. Satisfying new demand due to population growth/immigration.

    Greenspun’s analysis/hypothesis only works if all the 1.4 million new dwellings belong in category (1) above.

  2. Salaries are eventually going to catch up to the 1000% rise in housing costs of the last 4 years. The government could do a better job distributing newly printed currency as guaranteed basic income instead of buying stocks.

    • the government does not “buy stocks” and the “newly printed currency” handed out as a “guaranteed basic income” would most like end up funding the bureaucracy that hands out the money as well as the opiod, alcohol and drug industries — not housing.

  3. “Half of families who rent and nearly one-fourth of home owners pay more than 30 percent of their monthly income toward their housing costs, a level widely considered unsustainable.” This to me is one of the biggest lies and I hear it constantly. I pay over 50% of my income in taxes. This is widely considered unsustainable. Why doesn’t the government declare me taxed burdened and provide relief for me.

    • that number struck me as well — what else are you supposed to spend your money on besides housing, food and clothing? Food nowadays is pretty close to free judging by the porkiness of our fellow Americans and clothing doesn’t cost much with the advent of Amazon and others like it.

    • Why are you complaining about high taxes if you spend on nothing other than housing, food and clothing?

      Is the 30% of their monthly income pre or post tax?

    • “pay more than 30 percent of their monthly income toward their housing costs,” My bet is these people pay no money in taxes.

    • Mitt Romney claimed that 48% of all Americans pay no taxes. My guess is these are also the same people that struggle to pay rent. They may pay some sales tax and what not but probably receive some sort of government assistance to off set all that. I don’t know for sure I am more or less just guessing here. I do know that I pay approximately 60-70 percent of my income to taxes.

    • How is it you pay more than 50% of your income in taxes? I don’t think the math holds up. Even if you are making 300K+, it would only be your marginal rate that would approach that – not your total bill.

    • I actually found a pretty good site that does a quick and dirty calculation of taxes in various situations. I found that, under the worst case scenario (single filer, no deductions, living in high-tax California) the total tax rate only approaches 50% once you get up to $2,000,000 in regular income.

      For a piker making $200.000, the total rate is about 34% (in lower-tax Mass, it’s 31%). And yet I always seem to hear people who I don’t think make anywhere near $2,000,000 claiming to pay “over half their income” in taxes…

      https://www.irscalculators.com/tax-calculator

    • jimbo: I don’t see the inconsistency between that calculator and Toucan Sam’s statement, even if T.S. is earning less than $2 million/year. The US has property tax, sales tax, excise taxes, airline ticket taxes, gasoline taxes, private airplane fuel taxes, etc., etc.

    • Phil –

      Well, sure there are other taxes. But let’s again take the example of a single person making $200,000 with no itemized deductions in California. According to that tool, he would have $132,070.96 left after State and Federal income taxes. So you are telling me that someone making $200,000 is going to be paying more than $32,000 in other taxes during the year? Maybe, but I just don’t see it.

      Look – I’m no more a fan of taxes than anyone else. But taxes for regular working people are just not that high in this country, and I get irritated when I repeatedly hear this “I pay over half my income!” line…

    • > So you are telling me that someone making $200,000 is going to be paying more than $32,000 in other taxes during the year? Maybe, but I just don’t see it.

      It’s a fair question. I made a start:

      – Taxes paid before the employee ever sees the money (the so-called “employer’s share”, which is of course nonetheless a tax paid by the employee in the form of a lower salary):

      Social security: $8,239
      Medicare: $2,900
      Federal + CA unemployment: at least $420, potentially more
      CA disability and paid family leave: $1,229

      – The average Californian pays $4,783 in property tax (https://www.mortgagecalculator.org/helpful-advice/property-taxes.php)

      – California has a 6% state sales tax, but with local taxes the median is 8.44%. It’s hard to know what percentage of a $200k family budget would be subject to sales tax. $30k? That would be $2,500.

      That was just a guess, but it turned out to be surprisingly close by a different measure. According to the St Louis Fed, in 2018 CA collected a total of $53.846 billion in sales tax; extrapolating that from 6 to 8.44%, and dividing by the 30.0 million adult population gives … $2518 (!)

      – According to the FHWA, the average # of vehicle-miles per licensed driver in California is 14,400. At 20 MPG (mileage is not great, sitting parked on a freeway), this is 720 gallons of petrol per year, which attracts $550 of CA + federal tax.

      – But it’s not just fuel; if this family buys and keeps one car — say the US’s best-selling car, a $26,000 Toyota Camry — every 5 years, the fees due at purchase and annually average out to $755/year

      – If they take their family of four on two round-trip economy-class flights each year (one domestic, one to London), total US taxes add up to $500.

      – Roughly 11.5% of Californian adults smoke. The average American smoker consumes 22.5/day, or about 411 packs/year. Each attracts $3.88 of combined CA + federal tax, or $1,593, 11.5% of which is $183 x two adults = $366

      I’m out of time, and I think those are the biggest ones, but there’s probably a very long tail. Can we find another $9,740?

    • Toucan Sam has an income higher than 200,000! You are forgetting about Obama care premiums and my property tax is much higher than the average due to prop 13. Also I run various state use taxes and fees. Not to mention inheritance tax. 60-70 percent of my income goes to taxes! This is no lie!

  4. I fail to understand why affordable housing shortage is such a hard problem: it was solved in the Soviet Russia decades ago. Here are four easy steps:
    1. Send all rich folks to the Gulag, together with their extended families. (consult the campaign managers of Mr Stalin-Sanders n how to “eat the rich” most efficiently.)
    2. Employ the cheap undocumented labor to survey the newly available residencies and to put up inexpensive drywalls that partition each of them into 6-12 affordable ones.
    3. Re-settle the proletariat one family per cage^H^H^H^H apartment (facilities may be shared temporarily, but that’s OK)
    4. Kumbaya! Don’t forget to employ folks to monitor and report the rising inequality and to administer eviction of the emerging bourgeoisie.

  5. If only there were some way to limit the influx of immigrants. Surely our best and brightest are working diligently in Washington to enact a solution that would benefit our existing citizens…

  6. “I.e., only government can save us!”

    So the free market is clearly not achieving success, what do you suggest?

    • To describe the housing market as “free” is the height of comedy.

      Try building anything in (for example) California, then come talk about how the “free market” is failing.

  7. Everything good is scarce. When people complain about it, what they’re saying is that *at the price they’d like to pay* they can’t get as much as they’d like.

    Me, I’m disappointed in the scarcity of employers willing to pay $500/hr for my services.

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