Can reforming zoning rules open the door to more homes?
The United States is now facing a housing shortage of 4.5 million homes, up from 4.3 million the previous year, according to a new analysis by Zillow.
Zillow said this worsening deficit is the root cause of the nation's housing affordability crisis.
"The simple fact is there are not enough homes in this country, and that's pushing homeownership out of reach for too many families," said Zillow senior economist Orphe Divounguy. "The affordability crisis extends to renters as well, with nearly half of the renter households being cost-burdened. Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it."
Despite a surge in construction during the pandemic, the pace of building has not kept up with demand. In 2022, the US built 1.4 million homes, the highest number since the early stages of the Great Recession. However, the number of families increased by 1.8 million that year, further widening the gap.
The imbalance between supply and demand has led to skyrocketing home prices and rents. Across the country, there were approximately 8.09 million "missing households" in 2022 (individuals or families living with nonrelatives) compared to just 3.55 million housing units available for rent or sale.
Zillow's research indicated that strict land-use regulations contribute to housing unaffordability by constraining supply in many markets, even those with higher incomes.
The Census Bureau reported that roughly 1.45 million homes were completed in 2023. While this marks progress, it falls short of addressing the extensive deficit.
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Experts argued that reforming zoning laws to allow for greater density is crucial for increasing housing supply. Measures such as eliminating or reducing parking requirements and minimizing delays in building permit approvals are also recommended.
"Reforming zoning rules to allow for more density is key for more homes to be built," Zillow said. "Even adding a modest amount of density in the country's biggest markets could create millions of new homes."
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