It is no longer the case that a lack of housing in the U.S. is limited to the bigger, coastal cities. The housing shortage has spread across the country, and investors are considering the opportunities now presented in different markets as a result of this emerging trend.

America’s housing shortage is not limited to one area

A 2022 housing report outlined the crisis in simple terms. Across the U.S. the deficit in available housing doubled in the past decade, reaching 3.8 million units needed. The housing shortage has further widened and deepened, across 47 states.

230 metropolitan areas had their housing shortages worsen, and some hubs that previously had adequate supply have seen underproduction, including Phoenix, Arizona, and Jacksonville, Florida.¹ 

What America’s housing crisis means for renters

The shortage in supply is resulting in rising housing prices and soaring rents. Traditionally affordable alternatives to major cities have become too expensive for many renters with metro hubs such as Boise, ID, Austin, Tx, and Reno, NV, cited as examples of this trend.²  Furthermore, bidding wars usually associated with the buyer’s market have been reported across the country, in areas of Chicago, Atlanta, and New York.³  

Why the housing deficit could be an advantage for investors

Building more homes may seem like a simple solution to the housing crisis, but there are a number of reasons why supply is not keeping up with demand. Rising interest rates and high housing prices mean that potential buyers are not able to afford new homes and the construction industry has become hesitant to build for this reason.⁴ 

These factors follow the supply chain issues that have impacted the wider economy in the past year, leaving housing supply behind demand for the foreseeable future. All of this bodes well for the multifamily sector, as people seek rentals as more affordable alternatives to buying homes. 

The spread of housing shortages beyond the coastal regions further shows the potential value in diversification of a real estate investment portfolio, and investors are now examining opportunities that may have previously been outside of their scope. 

The multifamily sector has had a strong 2022 across the U.S. thus far, with resilient demand expected for the months to come.⁵ 

iintoo remains bullish on commercial real estate as a tool to achieve portfolio diversification and mitigate risk. We currently have a blended fund available that provides access to a diverse set of asset types and geographies across the US. If you are considering new investment opportunities log into iintoo’s platform now.

Sources:

(1) Up for Growth: Housing Underproduction in the U.S. 2022

(2) New York Times: The Next Affordable City is already Too Expensive

(3) Wall St Journal: Bidding Wars…Coming to Rental Market

(4) NPR: The U.S. needs more homes but builders may be slowing construction

(5) Fannie Mae: Multifamily Economic and Market Commentary July 2022

Map image: New York Times: ​The Housing Shortage Isn’t Just a Coastal Crisis Anymore, July 14 2022