Giving Compass' Take:

· The Urban Institute take a look at the factor contributing to the current affordable housing crisis, including scarce resources and expensive labor which reduce the amount of construction.

· What can be done to overcome these challenges? How can philanthropy help in this area? 

· Check out these five facts about the US housing supply.

Homeownership builds wealth and brings stability to neighborhoods, but a lack of housing supply, particularly of affordably priced homes, is suppressing homeownership today. Analysis by the National Association of Home Builders (NAHB) suggests there is a shortage of about 400,000 for-sale units nationwide, with other estimates showing even larger deficits.

Reduced production of single-family homes over the past decade is counterintuitive because the US population has increased over time. After a downshift following the 1970’s wave of baby boomer–induced single-family home construction, the population-adjusted pace of single-family construction was remarkably constant, despite year-to-year ebbs and flows.

From 1980 through the early 2000s, single-family construction averaged just higher than 41,000 starts per million people. In the 2010s, the Great Recession triggered a production plunge, and single-family construction fell to nearly half the pace of the three previous decades.

The relative weakness of today’s affordable housing supply coincides with indications of relatively stronger demand. An assessment of online searches relative to active for-sale inventory by realtor.com suggests that a “demand surplus” is evident across much of the for-sale inventory priced below the $340,000–350,000 level, a prime price range for potential first-time homebuyers.

A key trend driving the lack of affordable for-sale inventory is the increasing costs of single-family construction, which can weigh on housing affordability. On a per completion basis, total average spending per unit in 2018 was $344,701—70 percent more than its 2009 recession-era low of $202,528.

Read the full article about affordable housing by Michael Neal and Laurie Goodman at Urban Institute.