May 1, 2023
This post reminds us of one of Mark Twain’s famous quips: “There are lies. Damn lies. And statistics!”
An interesting piece in the Wall Street Journal ran recently on the U.S. housing shortage, and depending on the source, it’s as “few” as 1.7 million housing units or as many as $7.3 million units, comprised of single-family homes, apartments, condominiums and townhomes—even senior living facilities. Even in a country like the U.S., with around 142 million housing units, that’s quite a range. It all depends, of course, on how the numbers are counted.
Starting with the low end, John Burns Research & Consulting, a real estate advisory firm, pegs the housing shortage at 1.7 million. The Burns’ company uses demographics and vacancies and factors in the overbuilding that took place in the housing industry in the early 2000s. Realtor.com uses a more straightforward approach by calculating new household formation since 2012 at 15.6 million and the number of new-home starts during that period, or 9.03 million, which leaves a gap of 6.5 million. The National Low Income Housing Coalition (NHLHC) comes from the perspective of housing affordability, and namely, that there are only 7 million homes affordable for people with extremely low incomes. Because there are 11 million such households and NHLHC estimates that 3.3 million of those homes are occupied by people who aren’t extremely low income, the group pegs the shortage at 7.3 million. Then there is the Up for Growth number of 3.8 million. Up for Growth is a housing policy group focused on the housing shortage and arrives at its housing shortage number by estimating the total number of units needed as the number of households, plus the number of households that should have been formed but didn’t because housing wasn’t available, plus 5% to account for normal vacancy rates as housing units turn over.
As you see, it is a complicated and complex problem and politics aside, the lack of housing inventory is the main culprit to the high cost of housing- and not just in Sonoma County.
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