Researchers at the University of Southern California (USC) released a comprehensive study this week arguing that “decades of policy mismanagement” have created a shortage of affordable housing across the US and pushed home ownership out of reach for millions of Americans. .
The full study, published in the January issue of the Russell Sage Foundation Journal of the Social Sciences, goes back 20 years to examine the origins of the current housing crisis. The analysis also comes at a time when multiple wildfires are ravaging parts of the Los Angeles area. CBS News reported Wednesday that at least 25 people have died, more than 12,000 buildings have been destroyed and 88,000 residents are still under evacuation orders.
USC researchers say the national housing shortage – up to 7 million units, according to some estimates – is expected to deepen in the coming years due to the effects of climate change and the frequency and intensity of natural disasters such as hurricanes and tornadoes. wildfires.
“Strongly insulated building construction reduces the potential for losses due to unforeseen disasters – fires, earthquakes, hurricanes and so on. In Los Angeles, this lack of flexibility could quickly accelerate development as migration squeezes the existing housing stock,” said Dowell Myers, USC professor and lead author of the study.
Research says this problem can be traced back to the early 2000s when subprime lending activities were rampant. The aftermath of the housing market crash and the Great Recession led policymakers to overcorrect by “tightening mortgage lending standards and reducing new construction funds.” In turn, millennials, who were new to the housing market, were faced with few choices as a career in home construction. fell to its lowest level in 60 years.
Data from The Urban Institute shows that the availability of mortgage credit as of the second quarter of 2024 remains well below what are considered “reasonable lending levels” from 2001 to 2003.
Policy missteps cited in the study include a “gross underestimation of millennial demand” that was not seen until years later “when pent-up demand increased.” homeownership rates; used “flawed estimates of demand” that did not identify households unable to build due to housing shortages; and misinterpreted the post-housing crash slowdown as a “permanent shift” in consumer preferences.
The study notes that from 1976 to 1990, the national birth rate increased by 32%, which eventually led to an influx of young people moving to cities in 2010. The Great Recession “delayed their entry into stable jobs and housing,” and at the time they came out of the recession to buy homes, “the property wasn’t there.” Home builders and local officials mistakenly think millennials will stay. in houses and have long-term roommates, but instead their need to own a home increased dramatically.
USC researchers have provided two key solutions to address the growing supply shortage. The first is to shorten the backlog for creating new homes in anticipation of demand over the next five years. The second is to combine tracking population growth and housing supply instead of separating them.
“Housing policy needs to be better at targeting the needs of different age groups and life stages to avoid mismatches between supply and demand,” Myers said. “Without an effective policy, we not only run the risk of not being able to meet demand but also of not having a strong housing supply ready to accommodate victims of weather-related disasters, such as wildfires, or other emergencies that create new demand at a moment’s notice.”
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