A recent report from the US National Association of Realtors provides an interesting perspective on the real estate market south of the border. Like Canada, the United States has a housing-per-resident ratio lower than the OECD average: fewer than 430 housing units per capita compared to an average of over 460 for the group1.
Here are the report highlights:
The report places particular emphasis on housing as critical infrastructure, necessary for the proper functioning of an economy. It also argues that the chronic lack of new construction that has characterized the US housing market in recent decades has led to an affordability crisis and an aging housing stock requiring major renovations.
The gradual decrease in the growth rate of the national housing stock between 1968 and 2020 is presented from several angles. In particular, we can see that the slowdown in construction was especially significant in the northeast of the United States.
The dynamics of underbuilding at the national level do not seem to be simply due to the barriers to new construction. According to the report, even metropolitan areas considered to have low barriers have underbuilt relative to job growth in recent years.
The underinvestment in the housing sector is evident by the declining share of residential fixed investment in the American GDP, falling from 5.6 per cent on average between 1960 and 2000 to 3.8 per cent between 2001 and 2020.
The fall in affordability of median properties between 2012 and 2019 is highlighted, with a decrease in 45 of the 50 states. In these 45 states, the share of households able to afford a median-priced home declined by 7.2 percentage points during this period.
