- Looking at the number of American households and the number of vacant housing units, Freddie Mac, the government-sponsored purchaser of mortgage-backed securities, estimates a current supply shortage of 3.8 million units, driven by a 40-year collapse in the construction of homes smaller than 1,400 square feet.
- The group Up for Growth also arrived at an estimate of 3.8 million, using data on the total demand for housing and the overall supply of habitable, available units.
- The National Association of Realtors compared the issuance of housing permits with the number of jobs created in 174 different metro areas. It found that only 38 metro regions are permitting enough new homes to keep up with job growth; in more than a dozen areas, including New York, the Bay Area, Boston, Los Angeles, Honolulu, Miami, and Chicago, just one new home is getting built for every 20-plus jobs created. The NAR estimates an “underbuilding gap” of as many as 7 million units.
These numbers draw on data such as vacancy rates, household-formation trends, and building trends. But none of the estimates capture what I’ve come to think of as the affordability gap: the difference between the housing we have and the housing we would need in order to ensure that working-class people could once again live in our big coastal cities for a reasonable cost. Freddie Mac does not purport that building 3.8 million units would make New York accessible to big middle-class families and end homelessess in San Francisco. The National Association of Realtors is not contemplating whether janitors can walk to work in Boston…
To come up with that estimate, the two economists built a complicated model that assumed Americans could move wherever their wages allowed and the housing supply would adjust as it would in a place with typical permitting standards. In such a world, they estimated in some associated work, 53 percent of Americans would not live where they are currently living. San Francisco would have an employed population 510 percent bigger than it does today—implying an overall population of something like 4 million, rather than 815,000, with 2 million housing units instead of 400,000. The Bay Area as a whole would be five times its current size, the economists estimated. The average city would lose 80 percent of its population. And New York would be a startling eight times bigger. Some back-of-the-envelope math (mine, not theirs) suggests that the United States would have—deep breath here—perhaps 75 million more housing units in its productive cities than it currently has.
Considering such big numbers can be both helpful and daunting. The sheer size of these figures – multiple millions to tens of millions – highlights the scope of the problem. Housing is not a small issue; it is a large issue that needs addressing. Big numbers can help convince people this is an important social issue to address. On the other hand, these figures are daunting. That is a lot of housing units to consider. How can small efforts contribute to such a big need? Who can address this?
Even if the various methods and experts above do not agree on the same numbers, together they suggest much needs to be done. Can we get a commitment from states or cities to approve more units proportionate to their populations? I could imagine some kind of pledge drive and counting system to see the progress toward a sizable goal. Or, how about a long-term plan on the scale of a Manhattan Project or a space race to get units built? Of course, addressing housing at the federal level is difficult.