Real Estate
Houston, Dallas, San Antonio and Orlando grapple with housing crunch
Rapid population growth is causing Houston, Dallas, San Antonio and Orlando to face residential properties shortage
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Houston - In a recent eye-opening discovery concerning the escalating housing crisis in the United States, the Bank of America's research has painted a distressing picture for those looking to buy a home, as reported by Dallas Metro News. The shortage of available residential properties is now a severe and persistent issue, with specific areas being hit particularly hard, raising fears about the affordability and accessibility of homes.
The four cities at the heart of this housing shortage include three in Texas — San Antonio, Dallas, and Houston — and Orlando, Florida. Referred to in the report as a "hot quadrant," these locations are experiencing rapid population growth and a simultaneous squeeze on existing housing supplies. To be specific, the study states, "San Antonio, Dallas, Orlando and Houston all fall under this categorization."
The cause of this dilemma stems from a combination of economic and demographic factors. These cities are witnessing a population boom, supported by a flourishing job market and coinciding with a lack of housing. The situation, as of June 2023, has drawn new residents to Dallas and Orlando, both of which have seen job growth far above the national average.
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However, this increase in population is a double-edged sword. It has led to a scenario where the ratio of housing to people has dipped below the national average. In a comparison with the 2022 national figure of housing units per capita, standing at about 0.43%, Dallas and San Antonio are even more pronounced at 0.39% and 0.40% respectively.
The fallout from this shortage has caused home prices in these cities to soar to levels not seen in the last two years. As an example, home prices in Orlando surged by 58% compared to the same month in 2019, and Dallas saw an increase of around 49%.
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Nevertheless, there is hopeful news that these cities are taking steps to address the lack of housing. In the first five months of 2023, all four cities saw higher-than-average permits issued per person, indicating possible relief. Additionally, forecasts show that new multifamily housing construction may reach an all-time high in 2024, hinting at potential relaxation of the pressure as the disruptions related to COVID-19 begin to wane.
"So, while the good news is that cities with lower housing supply are already seeing higher construction trends, the question is whether supply will continue to keep up if the inward migration trends are sustained in these growing parts of the country," the study said. "If not, there will continue to be a strong housing need."
In stark contrast to the housing shortage affecting many American cities, some urban areas are facing an unexpected surplus of housing. This oversupply could be the result of a decrease in population, or an excess caused by building too many homes.
Cities like St. Louis and Detroit demonstrate the first situation, where a declining population has led to extra housing. On the other hand, Miami represents the second situation, where overbuilding has created an excess. This difference in housing trends shows that the challenges faced by cities across the country aren't the same everywhere.
In St. Louis, Detroit, and Miami, this oversupply could lead to lower property values in the future, and homeowners should be ready for possible financial effects.
"So what does this mean for the local housing market?" the note said. "It could mean that house prices might cool faster over the long term when home selling traffic picks up again."
Bank of America conducted this analysis by looking at migration patterns compared to housing availability, using their unique internal data. The study is particularly valuable now, when many people looking to buy or sell homes are dealing with a nationwide housing shortage.
The latest estimates from Freddie Mac suggest that the U.S. is facing a shortage of nearly 3.8 million homes available to buy or rent. This lack of housing continues to push prices higher, keeping them at worrying levels.
Adding to this complicated picture, mortgage rates are currently near the highest they've been in years, which makes the housing situation even more complex. These factors highlight the varied and intricate nature of the U.S. housing market, where both surplus and shortage exist. Different areas are influenced by different economic factors, creating a variety of challenges and opportunities for those involved in the housing market.
"Current housing market dynamics continue to be fueled by the lack of existing homes available for sale, a trend that did not improve during the spring homebuying season, when more homes are typically put on the market," Fannie Mae economists wrote in the analysis.
"This has supported a return to home price growth in recent months and continued to boost new home construction."
Credit: Dallas Metro News, FOX Business, Bank of America – Business