Housing Shortage Intensifies in US: Research Highlights Four Cities at Epicenter of Crisis

As the US housing market grapples with a chronic shortage of available houses, new research from Bank of America sheds light on the severity of the crisis, with four cities emerging as the epicenter of the issue. According to the analysis, prospective homebuyers are facing a dire situation, particularly in San Antonio, Dallas, Houston, and Orlando.

The study reveals that these cities, which are experiencing rapid population growth and a thriving job market, are simultaneously struggling with dwindling housing inventory. This convergence of factors has created a “hot quadrant” of housing scarcity, as described in the report. The research found that these cities fall into this category due to their existing stretched housing stocks and continued population influx.

Dallas and Orlando, in particular, have witnessed remarkable payroll growth, surpassing the national average, and are magnets for new residents seeking job opportunities. However, this influx has contributed to a decline in housing units per capita, with Dallas and San Antonio falling below the national average of 0.43% at 0.39% and 0.40%, respectively.

The consequences of this scarcity are reflected in soaring home prices. The report indicates that home prices in Orlando have surged by a staggering 58% compared to the same period in 2019, while Dallas experienced an increase of approximately 49%. These figures highlight the struggle that potential homebuyers face in these markets, as affordability becomes an increasingly elusive goal.

Despite the challenges, signs of efforts to address the shortage are visible. The study points to higher-than-average permits issued per capita in all four cities during the first five months of 2023. Furthermore, it is anticipated that new multifamily completions will reach record levels in 2024, indicating a commitment to easing the supply-demand gap.

However, the report poses a critical question: can the pace of construction keep up with the sustained influx of residents? Should this not be the case, the housing need in these growing regions could persist, exacerbating the crisis further.

Conversely, there are cities on the opposite end of the spectrum, where declining populations or excessive construction have led to relatively high housing supplies. St. Louis and Detroit are likely examples of the former, while Miami represents the latter. For homeowners in these areas, this could translate into a potential drop in property values.

The implications of these housing dynamics are clear: as home selling traffic picks up, house prices may cool over the long term. The Bank of America analysis underscores the intricate interplay between migration trends, population growth, and housing supply, all of which contribute to the evolving landscape of the US housing market.