These are the states where the housing shortage is the worst (2024)

FAQs

These are the states where the housing shortage is the worst? ›

California currently has the largest deficit of homes at 978,000, while Mississippi fell short by 1,000. Metro areas were also affected by the crisis, as Up for Growth data shows 230 metro areas experienced housing underproduction from 2012 to 2019.

Southern California and the Bay Area are epicenters in the nation's housing crisis. The Los Angeles-Orange County metro area had a shortfall of 388,874 homes in 2019, or 31% more than in 2012. The shortfall tripled in the Inland Empire to 153,372 homes in 2019, fourth highest in the Up For Growth study.

California's chronic shortage of housing manifests itself in sky-high housing costs, the nation's worst poverty and its highest level of homelessness.

Chicago, Illinois, Houston, Texas, Dallas, Texas and Washington, DC follow, where the affordable housing shortage exceeds 150,000 rental units. The gap between affordable housing supply and demand is slimmer in Louisville, Kentucky, short by 15,300 rental units, and Buffalo, New York, short by 17,300 units.

Leading the nation with the largest drop from the 2022 peak is San Francisco, where home prices have fallen nearly 17%. Other cities with double-digit home-price declines from last year's peaks include Seattle, San Jose, and Phoenix.

In the U.S., Miami was the city with the highest risk of a housing bubble and reported the highest house prices and rental growth of all the cities in the study. For the rest of the country, the Magic City was followed by Los Angeles, San Francisco, Boston, and New York.

California, Illinois, New Jersey, and Delaware are home to the most at-risk housing markets, according to a Special Housing Risk report released by real estate data firm ATTOM. “Some parts of the country remain considerably more exposed to housing market declines than others,” says Rob Barber, CEO of ATTOM.

Hawaii and California are the LEAST affordable places to live in the U.S as incomes fail to keep up with soaring property prices.

How bad is the US housing shortage? ›

According to a report from the National Multifamily Housing Council, the U.S. will be 4.3 million apartments short of meeting the demand for housing by 2035.

Studies have shown that for the past 40 years, housing supply has not kept pace with demand, resulting in a housing shortage ranging between 2 million and 6 million homes. Yet across America, a combination of recalcitrant homeowners and outdated zoning laws routinely block attempts to build more housing.

Since about 1970, California has been experiencing an extended and increasing housing shortage, such that by 2018, California ranked 49th among the states of the U.S. in terms of housing units per resident.

Several issues have contributed to the country's current housing shortage, including the pandemic, inflation and increased interest rates. Essentially, though, it's a problem of supply and demand: New home construction dropped precipitously after the Great Recession and has yet to fully recover.

Among the most expensive cities that saw prices falling are Anaheim, California, with the median price of $1,132,000, down 1.6% from a year ago; Los Angeles, with the median price of $829,100, down 1.3%; and Boulder, Colorado, with the median price of $759,500, down 2.0%.

By the fourth quarter of 2024, the firm expects home prices to fall 19% in Austin, 16% in Phoenix, 15% in San Francisco, and 12% in Seattle.

Although home prices are expected to improve in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the median price of $822,300 recorded in 2022.

All the cities on this graphic are classified as severely unaffordable⁠—and, for the 12th year in a row, Hong Kong takes the top spot as the world's most unaffordable housing market, with a score of 23.2.

What city has the highest risk of housing bubble? ›

The city of Toronto has the highest risk of a housing bubble, according to a recent survey released by investment bank UBS. Other cities at a high risk include Frankfurt, Hong Kong, Munich, Zurich and Vancouver.

In 2022, Toronto, Canada, was the housing market most at risk with a real estate bubble index score of 2.24. Frankfurt and Zurich followed close behind with 2.21 and 1.81, respectively.

The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions of people losing their jobs and many businesses going bankrupt.

What Caused the Financial Crisis of 2008? The growth of predatory mortgage lending, unregulated markets, a massive amount of consumer debt, the creation of "toxic" assets, the collapse of home prices, and more contributed to the financial crisis of 2008.

The National Low Income Housing Coalition says the U.S. has a shortage of 7.3 million units, Realtor.com says 6.5 million, mortgage-finance company Fannie Mae says 4.4 million and Up for Growth, a policy group focused on the housing shortage, says 3.8 million units.

The combination of record-fast home value growth to start the year and a record number of newly built homes increased the total market value of residential real estate in the U.S. in 2022, despite price drops to end the year. California remains untouchable on its perch as the most valuable housing market in the country ...

Low-Income Households Are Particularly Affected by Unaffordable Housing. Households with the lowest incomes are by far the most likely to have housing costs that are unaffordable.

The 2000s United States housing bubble was a real-estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2011.

The least affordable was Miami, where the median-priced home costs $598,000 and would require a monthly payment of $3,183 to cover mortgage and taxes — more than 85 percent of the local median household income of $44,581 (or $3,715 a month). Los Angeles and New York followed — no surprise given their steep home prices.

Conversely, Hawaii tops the list of the most expensive states with an average house price of $636,400. As the only state not geographically based in North America, it's unsurprising that the cost of moving is significantly higher, from flights to shipping costs.

What are the cheapest blue states? ›

Regarding affordability, the report indicates that Connecticut, Massachusetts, and New Jersey are the most affordable states with Arizona, Nevada, and Florida being the least affordable.

As prices become unsustainable and interest rates rise, purchasers withdraw. Borrowers are discouraged from taking out loans when interest rates rise. On the other side, house construction will be affected as well; costs will rise, and the market supply of housing will shrink as a result.

It comes up with 4.4 million too few houses at these price points. Up for Growth estimates the total number of units needed as the total number of households plus the number of households that should have formed but have not because housing wasn't available.

In the next five years, the US housing market is predicted to experience a slowdown, with prices either flat or experiencing a modest decline. According to a report by Zillow, home values are projected to increase by 5.5% over the next year, slower than the 16.9% increase seen in 2021.

Sixteen million homes currently sit vacant across the U.S. In every state across the country, many homes remain empty while hundreds of thousands of Americans face homelessness.

Despite the fact that there are some troubling trends in the housing market, we're likely not going to see a crash in 2023 or 2024. While house prices are likely to drop, demand for housing caused by America's ongoing housing shortage is likely to keep prices relatively stable.

Bay Area home values are falling, and are expected to fall further in the next year after reaching new heights in spring 2022. San Francisco home prices will tumble further than any other U.S. metro area next year, according to Zillow. “You could, in theory, say housing is in a recession,” Bellisario said.

The Biggest Culprit: The Lenders

Most of the blame is on the mortgage originators or the lenders.

In September 2008, Congress approved the “Bailout Bill,” which provided $700 billion to add emergency liquidity to the markets. Through the Troubled Asset Relief Program (TARP) passed in October 2008, the U.S. Treasury added billions more to stabilize financial markets—including buying equity in banks.

Over 10.9 million of the nation's 43.7 million renter households have extremely low incomes. Only 7.3 million rental homes are affordable to extremely low-income renters, assuming households should spend no more than 30% of their incomes on housing.

Why is it so hard to build in California? ›

According to one recent study, our state faces a shortfall of nearly a million units, and it's a shortage that grows each year. This shortage is, in turn, the result of a thicket of local rules making it prohibitively difficult to build housing.

California Housing Demand

In April 2023, 44.1% of homes in California sold below list price, down 26.7 points year. There were only 18.3% of homes that had price drops, up from 16.0% of homes in April last year. There was a 100.4% sale-to-list price, down 5.3 points year over year. …

While there's no consensus on what rents will do exactly in 2023 — go up a little, go down a little, or stay flat, according to three forecasts — what's clear is they are expected to return to more normal growth patterns, instead of the unsustainable, record rates seen in 2021 and 2022.

Ranch Homes

A home with a simple and concise layout is the cheapest type of house to build. Ranch homes are typically single-story structures with attached garages. They're easy to find construction plans for and highly customizable, so you can find a home that fits your needs and budget.

Mississippi

Mississippi, “The Magnolia State,” is the birthplace of Elvis Presley and the delta blues. It's also the cheapest state to buy a house in 2023. As of 2020, the total state population was 2,961,279, making it the 32nd most populated state. The most populated city is Jackson, with 153,701 residents.

Are we in a housing bubble right now? While a housing price correction is expected, we aren't in a housing bubble. Demand for homes remains high, and there are fewer home sellers than there were in 2022. And while the market is cooling, experts don't expect an actual housing crash or a housing bubble burst in 2023.

But over the course of the 20th century, government policy, the invention of cheaper, mass-produced building materials, marketing by home builders, and a shift in how people regarded their houses—not just as homes, but as financial assets—encouraged ever larger houses.

New Jersey, Illinois and California lead the nation with markets where properties are vulnerable amid a housing downturn and possible upcoming recession, according to a new report from real estate analytics company Attom.

As a result, there is a sizable shortage of new homes after more than a decade of under-building relative to population growth, according to a new analysis from Realtor.com released Wednesday. The gap between single-family home constructions and household formations grew to 6.5 million homes between 2012 and 2022.

Where is the lowest housing market in the US? ›

1. West Virginia. With a Zillow Home Value Index of $146,578, West Virginia is the most affordable state to buy a house in the US. Despite its low home prices, the state boasts natural beauty and outdoor recreation opportunities, making it an attractive option for homebuyers on a budget.

Hawaii and California are the LEAST affordable places to live in the U.S as incomes fail to keep up with soaring property prices.

The housing market's crash during the Great Recession led the industry to pull back on construction for many years, and materials and labor shortages during the height of the pandemic fueled another slowdown.

The imbalance between supply and demand; resulted from of strong economic growth creating hundreds of thousands of new jobs (which increases demand for housing) and the insufficient construction of new housing units to provide enough supply to meet the demand.