SE Valley Times

The U.S. housing market is facing significant challenges due to a widespread shortage of over 4.5 million homes. This deficit has led to increased housing prices and reduced mobility for the workforce, impacting the broader economy by reducing consumer spending and hindering businesses' ability to attract and retain talent. "Housing has long been a cornerstone of the American dream and a vital component of the nation’s economy," stated Makinizi Hoover, Senior Manager of Strategic Advocacy at the U.S. Chamber of Commerce.

This housing shortage traces its roots to a decade of underbuilding following the Great Recession and the growing demand from millennials entering prime home-buying years. High mortgage rates and soaring rents further compound the crisis. "The interactive map...represents GDP losses for each state, assuming that investment in new construction occurred outside the analyzed state," demonstrated by the analysis by the U.S. Chamber of Commerce.

Migration trends show the South with significant positive migration, contrary to the notable negative migration from the Northeast and California, intensifying the demand in high-growth regions. "People are leaving regions like California and the Northeast, where intense housing shortages have driven up costs and limited affordability," the report highlighted.

The report identifies regulatory and policy failures as central to the shortage, impacting the pace and cost of home construction. Increased construction costs and supply chain challenges post-pandemic have drove up the prices for essential building materials, making new home projects expensive. The Producer Price Index (PPI) for lumber, wood, metals, and metal products have seen unprecedented increases, further burdening the housing market.

In 2021, over 42 million U.S. households were cost-burdened, spending more than 30% of income on housing costs, according to the U.S. Census Bureau. This marks a rise of 4.9 million households since 2019. "The average United States home value is $355,328, up 2.7% over the past year," a figure that has outpaced the income growth and contributed to the affordability crisis. High mortgage rates remain a barrier for many potential homebuyers, though the Federal Reserve has indicated potential interest rate cuts.

Rising rents have further strained affordability, with an increase from 3% to 6.5% annually starting in 2021. In some cities, rents have surged by over 50% since pre-pandemic levels. The business community can play a pivotal role in addressing the housing market's challenges. "By leveraging public-private partnerships, the private sector can complement government efforts, bringing in expertise and efficiency that can drive housing costs down," the Chamber advocates.

The U.S. Chamber of Commerce is dedicated to collaborating with stakeholders across the housing sector to tackle these pressing issues. "For more information about our initiatives and how we are supporting the housing industry, please contact Makinizi Hoover at mhoover@uschamber.com."

Makinizi Hoover, along with Isabella Lucy, authored the report, highlighting Hoover's role as the Senior Manager of Strategic Advocacy at the U.S. Chamber of Commerce. Hoover mobilizes resources to address high-priority issues, focusing on key legislative and regulatory advocacy.