Housing shortage no longer limited to the coasts
After years of scaled back construction, housing scarcities appeared in coastal markets with high demand and strong economies. Once consumers began moving further inland in search of affordability and availability, deficits started rolling through the interior metro areas as well, a Freddie Mac report said.
This disparity drives up home and rent prices in those high-demand markets. Currently, 29 states have housing stock shortages — along with Washington, D.C. By proportion of housing stock at a deficit, D.C.'s 9.55% leads the way. Oregon comes next with an 8.8% shortage, followed by 5.7% in California and 5.4% in Minnesota.
"We are in the midst of a demographic tailwind, and we expect home purchase demand will remain strong well into the next decade as the peak cohorts of millennials turn 30 years of age in 2020 and beyond," Sam Khater, Freddie Mac's chief economist, said in a press release.
"Simply put, new housing supply is not keeping up with rising demand. We estimate that the housing market is undersupplied by 3.3 million units, and the shortage is rising by about 300,000 units a year. More than half of all states have a housing shortage, and the shortage is no longer concentrated in coastal markets but is spreading to the middle of the country in more affordable states like Texas and Minnesota."
Domestic migration has the opposite effect in the other 21 states, mostly with weaker economies and low growth job opportunities. West Virginia contains the largest oversupply of housing with a 7.1% surplus. The 6.2% excess in Arkansas came next, while Alabama's 4.4% was third.
Overall, a 2.5 million unit housing shortage exists in the United States. That number jumps to 3.3 million when the focus narrows to just the 29 states with supply deficits.