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It’s no secret that the nation is facing a housing crisis. A decade-plus of housing underproduction ran into a pandemic-induced inventory shortage resulting in a fundamental mismatch between housing supply and demand that has led to skyrocketing housing prices. At the same time, the supply of housing that does exist has become increasingly less desirable and less aligned with the needs of households today.
Many factors have contributed to where we are today. Restrictive land use policies and NIMBYism have hurt affordable and workforce-level housing availability. Surging land, material, and labor costs have made developing housing at prices affordable to middle-income households infeasible. The demand from an aging population for quality housing options for active seniors has far outstripped the creation of such units — reducing the turnover and availability of single-family homes for middle-income families.
The result is a substantial misalignment between where and how people are living and what they need and prefer. While the “headline” number for housing needs is important, understanding the why for these households is critical in identifying appropriate effective housing strategies.
Who is Experiencing the Greatest Housing Needs?
In more than two dozen housing studies our team has completed in recent years, we have found the following types of households are most in need of housing interventions (whether it be new housing, rehabilitated housing, or other solutions to their housing situation):
- Overburdened Households: Households defined as “cost-burdened” are spending more than 30% of their income on housing costs. Those defined as “severely cost-burdened” are spending more than 50% of their income on housing costs. When a disproportionate amount of household income is spent on housing, that individual or family is then often forced to make tradeoffs with other necessities, which contributes to a degraded quality of life. Overburdened households are typically lower-income and those with higher incomes are more often overburdened by choice.
- Displaced (and Missing) Workers: These workers are employed in a community, typically a major employment and population center, but simply do not earn the wages necessary to reasonably afford housing in or even around that community. As a result, they are living further and further away from their jobs (and other amenities) and commuting increasingly long distances. Remote working has not significantly mitigated this issue as many middle- or lower-income workers are not employed in jobs that can be done remotely. The lack of affordable housing also means that many communities are facing a shortage of available workers. This “missing” workforce makes it harder for employers within the community to fill vacancies and, in some instances, expand their business which may result in companies moving elsewhere.
- Seniors: Aging-in-place is preferred among today’s seniors. However, for many, this means remaining in the same community with the same social network and day-to-day activities rather than remaining in the same house. Many seniors prefer to move to quality modern rental units or condominiums in their community, particularly in downtown areas within walking distance of amenities, but these types of housing units are nonexistent in many places. As a result, seniors are staying in their homes (typically with much more space than they need), which has contributed to a low inventory of homes available for sale or rent by middle-income families.Others ultimately end up moving into senior-friendly housing outside of their long-standing community.
- Involuntary Renters: These renters would prefer to own a home but are priced out of the homeownership market and/or cannot make a down payment or qualify for financing (and in many markets today cannot compete with cash offers that have become more common). They are typically younger and/or single-income households that are getting married, starting a family, or are simply ready to put down roots and want to start building long-term equity. With the growing affordability gap and recent increases in interest rates, this group is expected to continue to grow.
- Underhoused Young People: Like “involuntary renters,” many young people (generally aged 18-34) are living with roommates or family members, not by choice, but because they cannot find suitable affordable housing. Many of these individuals are paying low or no rent while saving money so they can afford to live on their own. The relatively high number of these individuals is a major source of the demand for quality affordable rental apartments and starter homes – housing types that tend to be scarce.
- Those Living in Substandard and Obsolete Housing: The housing stock in many communities across the US is relatively old and continues to age. At the same time, many of the households living in older homes lack the means to maintain these properties. As a result, a notable portion of the housing stock becomes functionally obsolete each year, requiring new replacement housing (or substantial rehabilitation). Similarly, many households are living in housing that is substandard with significant health and safety issues requiring intervention. This may include a lack of adequate plumbing, kitchen facilities, heating, weatherization, and other physical deficiencies.
Each community is unique and many housing needs fall outside of these categories, which is why it is critical to understand the specific issues and reasons driving housing needs in any given community. By understanding the people behind the numbers, it’s possible to create meaningful solutions that address the unique needs and drivers of housing needs.
As housing affordability and resulting workforce issues grow in severity across the country, Camoin Associates is helping public and private organizations of all sizes analyze and address their housing needs, and developing strategies and solutions tailored to each community. Learn more about our housing and real estate development services.
