Housing Shortage Myths: Demographics Signal a Shift

2 min read

For years, the consensus among economists and policymakers has been that the United States is facing a severe housing shortage. Institutions like the Brookings Institution, Freddie Mac, and Harvard’s Joint Center for Housing Studies have consistently argued that millions of homes are needed to meet demand. However, a growing body of evidence suggests that this narrative may be based on outdated assumptions and failing to account for long-term demographic changes.

Changing Population Trends

The Census Bureau projects that the U.S. population will peak at around 370 million by 2080, but this assumes high levels of immigration. Under a low-immigration scenario, the population would peak much earlier, at approximately 346 million by 2043, followed by a steady decline. The Congressional Budget Office’s latest forecast even suggests that population growth could reach zero by 2056, with deaths surpassing births as early as 2030.

Slowing Household Growth

Household formation, a key driver of housing demand, is also expected to slow dramatically. Harvard’s Joint Center for Housing Studies projects that the U.S. will add 8.6 million households between 2025 and 2035, but only 5.1 million between 2035 and 2045. This would mark the slowest decade of household growth in over a century. Under a low-immigration scenario, the numbers drop further, to 6.9 million and 3.2 million respectively.

The Role of Zoning and Preferences

While some argue that restrictive zoning laws are to blame for high housing prices, others point out that these laws help preserve the character of neighborhoods and provide stability for homeowners. Economic research shows that many households prefer lower residential density, and zoning helps protect against uncertainty in property values. Removing these restrictions could lead to unintended consequences, including the erosion of valuable community amenities.

Current Construction Rates

As of September, housing completions were running at a seasonally adjusted annual rate of 1.192 million, which is already above Harvard’s baseline projection for the coming decade and nearly double its low-immigration projection for the next. If construction continues at this pace, it could potentially eliminate Freddie Mac’s estimated shortage within a decade.

Reevaluating the Housing Crisis

Advocates for increasing housing supply often push for the elimination of zoning restrictions, but this approach may be misguided. With demographic trends pointing toward a future of slower population and household growth, the housing crisis may be a thing of the past. Policymakers and economists must consider these long-term shifts before implementing sweeping changes that could have lasting consequences.

Source: Breitbart

Written by

Connor Davis