The conversation surrounding the nationwide housing shortage is not new, but it is worth revisiting as the market shifts and sellers wonder if they still have anyone to sell their home to! While supply and demand imbalances are greater in some areas than others, there is no doubt that every individual & family needs a place to live. This week’s new Homes of Silicon Valley blog provides access to an interactive map of where the highest housing shortages are occurring, as well as links to local and national perspectives as to how we got here.
The National Association of Realtors (NAR)® Housing Shortage Tracker calculates how many new permits are issued for every new job across 174 metropolitan areas. Historical averages suggest 1 new housing permit issued per every 2 new jobs; this is rarely the actuality for most metro areas.
The snapshot below reveals that in the period from September 2021 to September 2022, 56,200 new jobs were created in the San Jose-Sunnyvale-Santa Clara metro, yet only 6,736 permits were issued (and only 3,168 of these were single family residences/SFRs). For the San Francisco-Oakland-Hayward region, 109,000 new jobs were created while 12,614 permits were issued (less than 4,000 of these were SFRs).
CLICK HERE to view the interactive map and explore the different statistics of different areas across our state and across the nation.
A just-published read from Jeffery Hayward, Fannie Mae Executive Vice President and Chief Administrative Officer, explains that the causes of the housing shortage are widely understood, but also asserts that “…every state and city's path to addressing it is relatively unique, and the tools and tactics used to create badly needed new housing supply will have to be tailored.” Hayward summarizes:
“After the Great Recession, new home construction dropped like a stone. Fewer new homes were built in the 10 years ended 2018 than in any decade since the 1960s. By 2019, a good estimate of the shortage of housing units for sale or rent was 3.8 million. The pandemic-induced materials and labor shortage exacerbated the trend, however, as evidenced by the surge in rents and home prices in 2021.”
He then explains that while mortgage rates have resulted in some reduced demand, the supply problem will remain and be experienced most heavily by low- and moderate-income families who rely on the creation of affordable housing. After all, “Making sure mortgage funds are available to create and preserve affordable housing supply for low- and moderate-income families is central to what Fannie Mae does.” Yet Fannie Mae cannot finance what is not there to purchase and is reliant on communities constructing attainable new homes where they are needed most.
On a morel local level, both the New York Times and Los Angeles Times have published recent viewpoints on how California’s housing crisis has worsened and cites current state and county policies as the primary obstacle to a resolution. Namely these media sources call permit processes too difficult and homelessness too unmanaged. CalMatters summarizes these reads here.
The one thing we can all agree on is that every renter, homeowner, potential seller and potential buyer is impacted by the housing shortage. How much we are impacted depends on where we live and how long we stay there; how we overcome the associated challenges depends on what our strategy is and who helps us navigate it. That’s where we come in!
Please let us know if you have questions about the current state of inventory and demand in Silicon Valley. Homes of Silicon Valley is pleased to continually offer data-based perspectives and reality-driven guidance.
All our best,
Mark Barber and Your HOSV Team