Part I: Understanding the Problem
It’s Econ 101: Supply vs. Demand. And we have far too little supply, including options such as Accessory Dwelling Units, Four-Plexes, and Missing Middle options.
It will come as no surprise to most readers that much of our nation is in the midst of a severe housing crisis. A far cry from the pains felt during the great recession, today many regions - including almost all large metropolitan areas - are experiencing some form of housing shortage. In some areas, such as California, Austin, the Research Triangle in North Carolina, and my home region of Long Island, the housing shortage has reached an acute stage that threatens long term growth, economic competitiveness, quality of life, and the ability for younger generations to live in the region they call home.
The reality is there is no single silver bullet to address housing affordability. Municipalities across the nation are experimenting – with mixed results – any number of strategies and tactics, with some key lessons coming to bear.
In this blog series, I will focus on a set of strategies bound by one of the most fundamental laws of economics: Supply and demand. Regions such as Long Island, the Bay Area, and the Research Triangle, simply have far too little supply of housing. A recent study conducted by the National Up for Growth Coalition states that the nation is experience a startling shortage of over 7,000,000 homes, and growing. The shortage is especially acute in regard to housing that fits the economic needs and lifestyle demands of the growing number of households without children. In fact, through 2030, it is estimated that 87% of new household formation will be comprised of households without children, and over HALF of new households will be single individuals. Whether a young couple without kids, empty nesters, or singles, these growing demographic cohorts have similar needs in housing: a greater desire for smaller yards and/or interior square footage than their familiar counterparts in addition to far greater demand for condo, apartment and townhome living.
The effects of our housing shortage, which the Up for Growth Coalition study found affects 22 states, is a growing affordability issue. This in turn, has an effect on the ability for affected regions to retain younger generations (an issue that my home region of Long Island has been experience for decades now) and growing difficulty attracting a workforce. This brain drain effect, and the additional constraints on workforce growth at lower and mid economic strata has begun to stifle economic growth, results in higher taxes, deferred capital investments and maintenance on behalf of municipalities, strains on services, and threats to quality of life and economic sustainability.
Over the long term, there is no better means to provide greater housing affordability and address the shortage of units than to increase supply.
This is all the more true in regard to providing additional supply of housing types that are in greatest demand and/or lowest supply – the very type of multifamily rental and ownership options discussed above, and the provision of “gentle densification” that can add supply throughout a region while retaining neighborhood character and the single family home bedroom community fabric that so many Americans have, and will continue to, desire.
Unfortunately, as it stands today, the following critical housing typologies are often very difficult to get approved and built:
Image courtesy of Strong Towns. www.strongtowns.org
In many cases the aforementioned housing types are simply NOT LEGAL.
Zoning and other land use constrictions serve to literally prohibit the very types of housing that are needed to serve the market’s needs, provide a balanced housing stock for all economic strata, and ensure the ability to house the workforce necessary to generate ongoing commercial tax revenues.
Now, an important caveat is that these housing types are not necessarily appropriate for all neighborhoods. For example, a 30 or 50 unit apartment building, and certainly a 250+ unit building, are not appropriate within a lower scaled, less dense, single family home fabric. As such, it is important to consider the context of existing and surrounding neighborhoods, and to utilize those strategies that help preserve and enhance communities while paving the way to responsible growth and improved quality of life.
The related issues of constrained housing supply and lack of affordable are clear. In the remaining parts of this series, we will examine some important strategies that can help unleash the pent up demand for housing types that would reduce the affordability crunch while injecting new life into communities across our nation.
Article by Brandon Palanker