Maryland REALTORS® Online

By the Numbers: Measuring the Housing Shortage

BY CHUCK KASKY

The CEO of Maryland REALTORS® and host of the Association’s podcast, “Get Real Estate,” which is available through any podcast app.

It’s an old cliché: “What gets measured gets done.” The origin of this statement is up for debate, and it’s possible that the original phrase was actually “If you can measure it, you can manage it.” So, why are we not tracking one of the most important indicators of economic health and social wellbeing of our residents? We’re talking about the shortage of housing in the U.S.

We measure almost every element of the economy, but despite the metrics on housing that are currently collected, we as a nation don’t have a firm handle on how many families are homeless, living in unstable housing, or facing housing loss at any given time.

Here is a short summary of the challenges:

We have not built enough new housing. For the past forty years, housing production has not kept pace with demand, resulting in a nationwide housing shortage of anywhere from 2 to 6 million units. Maryland’s slide in building permits began in the 1960s, reaching a shortfall of at least 120,000 units. We estimate that Maryland’s shortage of rentals for very low-income residents is nearing 150,000 units.

Zoning is largely responsible for the shortage. Because local regulations dictate where and how housing is built, there is a growing focus nationally on zoning reform as part of the solution. Maryland officials so far have given only tepid support to housing supply measures, while other states and local governments are moving more decisively toward reform.

Affordability challenges are accelerating. REALTORS® know all too well the difficulties buyers have faced over the past year due to a combination of housing price appreciation and interest rate increases. As of this writing, a typical buyer lost an estimated $118,000 in purchasing power in the past year based upon these two factors. We now find that both rents and mortgages have increased dramatically, with no relief in sight.

It’s a crisis of the fully employed. When someone loses their home, they often can’t afford current rents, even if they have a steady income. As a result, they are forced into more transitory housing, like living with relatives or in their vehicles, which can itself lead to job loss. Maryland residents echoed the plight of affordability challenges reaching a large share of the population. In our State of Housing survey, an overwhelming 90% of Maryland residents said that having a full-time job and not making enough money was a large or medium obstacle to homebuying.

Governments are not working on a coordinated solution. Here in Maryland, as in other places, it is all too easy for local governments to lament housing unaffordability generally while deciding that housing growth should occur elsewhere. This is especially true when backed by the sentiments of the NIMBY (Not in My Backyard) crowd of citizen activists.

That is where data can help break through the noise about the severity of our supply issues. If we’re going to be serious about fixing the housing shortage, we need to know where we stand, where the needs exist, and what policies will get us to where we need to be.

With housing, as with other sectors of our economy, it all comes down to this: you can’t fix what you don’t measure.

Politico wrote an excellent piece, “The First Step to Solving the Housing Crisis Might Be Simpler Than you think.” Follow this link to read the story.

To review finding from our State of Maryland Housing Survey, follow this link.