A sharp increase in the housing supply gap is projected to worsen the affordability crisis, particularly for the disadvantaged, over the next year.
The gap will reach 4.5 million units in 2022, up from 2.5 million in 2018, according to a CoreLogic Public Policy Executive. This will be a crisis for those who earn less than half of what their neighbors do.
This cohort will face a shortage of 2.6 million units next year. People who earn more than what their neighbors earn will not be spared either, facing a gap of about 650,000 units in 2022.
Multiple factors are hampering development of more multifamily units. These include a rapid increase in material costs, such as a 150% spike in lumber prices in 2021. The necessity for multiple funding sources, adding complexity to deals, is another key factor.
Developers complain that the multiple financing sources needed for each project have deadlines that aren’t aligned. This results in longer timelines that add costs.