Housing shortages have led to an increase in home prices in the last few years. This rise in housing prices has led to many people being completely shut out of the housing market. However, some states — such as Texas and Florida — have successfully built many new homes.
This increase in building homes has led to housing prices falling in these states. However, some blue states — such as California and New York — haven’t been able to copy their red counterparts.
The Housing Market Since 2008
Since the financial crisis of 2008, the United States has had a difficult housing market. The price of homes has skyrocketed since 2008 for a variety of reasons. The fact that not enough homes were built in the last almost 20 years has exacerbated this problem.
The increase in home prices throughout the U.S. has led to many Americans being shut out of the housing market completely.
Americans Cannot Buy A Home
Because of this increase in home prices, many Americans feel that they cannot buy a home. Millennials in particular feel that they have been completely shut out of the housing market.
Many states around the U.S. understand that more houses need to be built. If more homes are built, then the price of homes will go down, as there will be more supply. However, some states are building more homes better than others.
More Homes Are Slowly Being Built
In the last few months alone, more homes have been available for sale, which is positive for the housing market as a whole. However, when compared to historical standards, the number of homes for sale on the market remains incredibly low.
Because so many buyers are looking for homes, this has led to an increase in home prices. The pool of homes to choose from is small — especially in states like California and New York.
A Small Supply
Many analysts have long warned that the housing market only has a small supply of homes available for sale.
“At the current sales rate, the housing market has only 3.5 months’ supply. While this is a challenging environment for homebuyers, the restricted supply is a boon for existing homeowners. House prices have never fallen on a national basis with less than six months of supply,” Matthew Walsh, Moody’s Analytics housing economist, said.
Homeowners Aren’t Looking To Sell
Many homebuyers are also homeowners already who are looking to sell. However, the ongoing housing shortage in many states has kept some of these potential homebuyers from selling.
There is a growing worry among these sellers that, if they sell their home and make a profit, they won’t be able to find a new house to buy. Therefore, they’re not looking to sell, which further depletes the amount of homes available for sale in certain areas.
Texas Builds More Homes
Some states have increased the number of homes being built in recent years. Texas is one such example. When compared to the rest of the states in the U.S., Texas is building the most new homes.
Because of this effort to increase homebuilding, the prices of homes throughout the state have dropped recently. This has only encouraged more people to move to Texas, as it’s become affordable for many.
Texas Compared To California
By comparison, California hasn’t built nearly enough homes to help with its ongoing housing shortage. In the last two years, California issued about 116,693 single-family home permits. Meanwhile, Texas issued about 293,569 in the same timeframe.
“Texas has built many more homes than California over many years,” Lawrence Yun, the chief economist and senior vice president of research at the National Association of Realtors (NAR), explained.
More Homes Are Being Built In The South
Across the board, stats show that more homes are being built in the south than in areas like California and New York. Texas and Florida remain two states that continue to build new properties.
However, states like North Carolina and Idaho have also increased homebuilding throughout their states.
Why Are Red States Building More Homes Than Blue States?
There are a variety of reasons why red states like Texas are successfully building more new homes than blue states like California. For the most part, however, states like Texas have fewer building regulations than states like California.
Less regulation allows for more permits to go through — and more homes to eventually be built. California, meanwhile, has stricter regulations which can hamper homebuilding.
Zoning Restrictions
California also has strict zoning restrictions, which can make starting the building of new homes much harder. Texas also has more construction workers than states like New York and California, which can help with the overall building process.
“Less restrictive zoning laws in Texas make starting new residential construction easier. Above all, demand fundamentals are much stronger in Texas than California or New York,” Walsh explained.
How To Help The Housing Shortage
To truly help solve the housing shortage problem — and drive down home prices — analysts state that states like California could benefit from doing what Texas has done by increasing the building of new homes.
However, changing zoning laws could also help. “California has already passed zoning reform at the state level; now those laws need to be enforced, and development needs to be supported instead of interfered with,” Daryl Fairweather, the chief economist at Redfin, said.
