A report issued by Freddie Mac has determined that 29 states have a housing supply deficit.
In the newly published study entitled “The Major Challenges of Inadequate U.S. Housing Supply
,” Freddie Mac found Oregon has the largest housing supply deficit, followed by California, Minnesota, Florida, Colorado and Texas; the District of Columbia was not factored into the analysis. On the flip side, Freddie Mac estimated that 21 states have a negative deficit, meaning they are oversupplied with housing inventory.
The report also charted how domestic migration is making a bad situation worse in some states. In pursuit of new opportunities where state economies are stronger, people have migrated from states with surplus housing like West Virginia, Alabama and North Dakota, to states with housing deficits, thus putting new pressure on high-growth states. As a result, the supply shortfall is driving up prices and causing their largest cities–particularly in California and Oregon–to become less affordable. Further complicating matters is the arrival of Millennials and Generation Z into the housing markets, which Freddie Mac predicted will further raise prices and shrink affordability options.
“We are in the midst of a demographic tailwind, and we expect home purchase demand will remain strong well into the next decade as the peak cohorts of Millennials turn thirty years of age in 2020 and beyond,” said Sam Khater, Freddie Mac’s chief economist. “Simply put, new housing supply is not keeping up with rising demand. We estimate that the housing market is undersupplied by 3.3 million units, and the shortage is rising by about 300,000 units a year. More than half of all states have a housing shortage, and the shortage is no longer concentrated in coastal markets but is spreading to the middle of the country in more affordable states like Texas and Minnesota.”