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Curbing the Housing Supply Shortage

Updated: Mar 15

Rising housing prices are becoming a serious issue across the country. How can we better manage the housing supply shortage in America to help solve this problem?


One of the major issues US citizens face today is rising housing prices. The US faces a housing shock gap of about 3.8 million units in 2020, according to Jeffery Zabel of EconoFact. With soaring inflation and interest rates that impact mortgage rates as well, both renting and buying homes have become more expensive than usual.


The Washington Post also suggests that every $100 increase in median rent is associated with a 9% increase in the estimated homeless rates. Although a few economists predict the drop in housing prices to be about 4% in 2023, the resulting decline in construction and rising inflation rates would not make a significant difference to housing affordability. As a result, it is important to look for larger solutions to the housing supply shortage that incentivizes construction. 


According to a recent report from CNBC, about 15% of American households are currently behind on their rent. Along with higher rental prices, citizens are dealing with inflated costs of their everyday expenses further straining their budgets and pushing them towards homelessness. Considering the rapid increase of housing prices and the oncoming estimations of a recession, in the short term it is important for renters to have a cushion for their increased costs through financial assistance programs. The federal government should be protecting and expanding the Housing Choice Voucher program for low and moderate-income brackets, and potentially lift 9.3 million individuals above the poverty line, as suggested by the Center for American Progress. Additionally, the Emergency Rental Assistance program could also be integral for families and needs to be funded further. 


One of the main long-term culprits of the housing shortage has been the local zoning laws that allow local governments to regulate and restrict the different purposes for the areas under their jurisdiction. This means that local governments can determine which land can be used for residential, commercial and agricultural purposes.


These zoning laws can also be exploited by having homeowners convince officials to restrict the supply of residential housing, particularly for low-income homes in the suburbs, by hiking up the prices in these areas. The Biden administration announced the Housing Supply Action Plan with proposed spending of $10 billion to address these regulatory barriers and provide long-term affordable housing built on an active economy with increasing construction jobs, according to an article by Andrea Riquier of Forbes. Additionally, the fund would enable leaders to streamline production costs in terms of time and money. The advantages and long-term impact of the bill make it crucial for us as citizens to advocate for this bill and signal its importance to Congress.


The opinions expressed in this article are those of the individual author.


Sources


Bhattarai, Abha, and Rachel Siegel. “Inflation Is Making Homelessness Worse.” The Washington


Dore, Kate. “These Are the 10 States Where Renters Are Most behind on Payments - and

High-Cost California Didn't Make the List.” CNBC, CNBC, 7 Oct. 2022, www.cnbc.com/2022/10/07/renters-are-most-behind-on-payments-in-these-states.html.


Khan, Ashfaq. Weller E., Christian. Roberts, Lily. Zonta, Michela. “The Rental Housing Crisis Is

a Supply Problem That Needs Supply Solutions.” Center for American Progress, 23 May 2017, www.americanprogress.org/article/the-rental-housing-crisis-is-a-supply-problem-that-needs-supply-solutions/


Riquier, Andrea. “Housing Market Predictions in 2022: Will Prices Drop?” Forbes, Forbes


Zabel, Jeffrey, et al. “Why, and Where, Are Housing Prices Rising?” Econofact, 2 Feb. 2022,


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