The Great American Housing Shortage

March 09, 2023

Rise and shine! It's a new day and The Shaker is here to serve you the best mix of residential real estate news. Yummy yummy.

What's important to know:

The US is facing a significant shortage of new homes, with a gap between single-family home constructions and household formations growing to 6.5 million homes between 2012 and 2022.
Multi-family housing can help ease housing affordability challenges by providing more supply for renters, but household formation is still outpacing building, leaving a supply gap.
Despite a boost in multi-family building, the gap between total housing starts and household formations grew from 1.8 million housing units between 2012 and 2021 to 2.3 million units at the end of 2022, according to a new analysis from Realtor.com.
To close the existing gap, an increase in both single-family and multi-family supply is necessary to help return balance to the housing market and take pressure off both sale and rent prices.
If the rate of total housing starts increased by 50% from the 2022 rate to an average rate of 2.3 million housing starts per year, it would take between 2 and 3 years to close the existing 2.3 million home gap.

Where America's Renters Hang Their Hats

The highest percentage of renters in the U.S. can be found on the East Coast, with four New Jersey cities and two Connecticut cities in the top five cities with the most renters.
Newark, New Jersey, has the highest percentage of renters, with over 79% of residents renting.
Nine out of the top 10 cities with the highest percentage of renters are in the Northeast, while Buckeye, Arizona, has the highest rate of homeownership at 92.39%.
Nearly three in four American renters want to buy a home, with money cited as the main barrier by 90% of respondents.
23% of renters plan on buying a home in the next two years, 15% plan to do so in the next three to four years, and 30% plan to buy within the next five years. One in five renters said they would buy a home in the next decade or longer.

The Tenant Opportunity to Purchase Act (TOPA) would grant tenants the first right to purchase their building if a landlord lists it or receives a credible offer from another buyer.
The bill would create a pool of funding to help tenants buy their building, staff up housing agencies to help tenants through the process, and give tenants as long as nine months to submit a statement of interest, form a tenants’ association, propose an offer, and secure financing.
TOPA is gaining support in the state legislature after being introduced by State senator Zellnor Myrie and State assemblywoman Marcela Mitaynes. Both politicians say that TOPA would protect their working-class constituents from being displaced.
The bill includes an affordability requirement, that all future maintenance, rent, and sale prices would need to be affordable to someone making 80 percent of the area median income.
TOPA purchases have been successful in D.C., with 25 buildings converted under TOPA over the last five years.

A Chicago woman found a squatter in her family home when she was trying to sell the property.
The squatter and the family claimed they had signed a lease with someone else, but the woman is unsure if it is part of a scam.
Squatter phony-lease scams happen more often than people think, according to a local real estate attorney.
The legal process could take up to 18 months if the squatters know how to "work the system and get delays in court."
The woman is caught up in an expensive and time-consuming legal battle with the squatter.

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