The Housing Shortage: Contributing Factors and Challenges

Relieving the Housing Shortage Isn’t as Simple as Building More

By Rose Morrison, managing editor of Renovated

The housing shortage isn’t just an American issue — it’s a global issue. Revitalizing the construction industry’s labor force and building more affordable housing will certainly help, but the solution isn’t that simple. Instead of thinking in the short term, look for long-term solutions that will make communities more resilient and sustainable for future generations.

Part of a series: The Global Housing Crisis: Facts, Figures, and Solutions

The Housing Shortage: A Growing Crisis

The housing shortage is getting worse. The latest estimates from the end of 2022 have found more than 1.8 billion people don’t live in a permanent domicile. Millions of people get evicted from their homes every year and millions more are in a perpetual state of homelessness.

The United States is short by 6.5 million homes and faces a growing homelessness problem. Entire city blocks are turning into tent communities for local citizens who can’t afford a place to stay, reminiscent of the Great Depression in the 1930s.

Contributing Factors to the Housing Shortage

The most densely populated urban centers are supposed to provide the most affordable housing in the country, but many places are experiencing the opposite effect. Major cities in developed countries like China, the United States, Canada and Australia have the least affordable housing markets in the entire world.

These countries certainly have the resources to build more affordable housing, but their efforts have yet to be successful. If anything, increasing construction has made the problem worse. Why hasn’t this seemingly straightforward solution improved the housing situation?

  1. High Housing Prices

The first and biggest reason is a lack of affordability. Sky-high home prices and rental rates make “affordable housing” largely unaffordable for most low-income citizens. The gap between families’ incomes and rental costs was massive before COVID-19 and the pandemic made the gap even wider.

Homeowners aren’t immune to affordability issues, either. The pandemic spiked home prices by 40%, forcing millions to turn to smaller units or rentals. As a result, the U.S. saw a sudden meteoric rise in demand for cheap apartments in major cities. The flood of new renters caused the housing supply to fill up fast, which in turn caused rates to increase substantially.

  1. High Overall Cost of Living

A high overall cost of living is the second big reason why building more homes doesn’t work. Even if a housing market has reasonable prices, residents can’t afford to live there because of skyrocketing costs for basic necessities like gas and groceries. This problem affects the entire country, regardless of local housing affordability.

  1. Poor Building Quality

Cities across the U.S. are pumping out affordable housing, even going so far as to ignore local zoning ordinances to speed projects along. However, the quality of these buildings will raise problems down the road. High maintenance costs and excessive energy consumption will make these “affordable homes” too expensive in the long run.

Tents on sidewalk
Homeless tents in Los Angeles Skid Row
Credit: Russ Allison Loar – Own work
The Housing Shortage: Legends Park West Mixed-Income and Affordable Housing Redevelopment in Memphis, Tennessee
Legends Park West is a Mixed-Income and Affordable Housing Redevelopment located in Memphis Tennessee, USA. ith 48 public housing units, 39 low-income housing tax credit units, and 13 market-rate units, Legends Park West is open to those earning a range of incomes.
Credit: U.S. Dept. of Housing and Urban Development (HUD) –

Sustainable Housing is the Solution

To build truly affordable housing, there must be a better understanding of the environment. Rapid urbanization has forced local governments to take shortcuts and build structures that won’t mesh with the Earth in the long run. Instead of creating just any housing, people need to develop sustainable housing.

Building eco-friendly communities that coexist with their environments will require some big-picture changes. New construction strategies such as 3D printing and modular building can help decrease construction times and create energy-efficient homes simultaneously.

People must also prioritize using organic building materials that naturally fit with the environment and can last for multiple generations. Another growing trend is the adoption of self-healing materials in construction, which could be a huge game changer for humanity’s resilience to climate change and natural disasters.

There is still a place for existing initiatives, such as income energy assistance programs that provide financial aid to low-income families. However, throwing money at the problem won’t work forever. Building designs, materials and tools in residential construction need significant adjustments to make permanent progress in the housing shortage.

Breaking Down Barriers to Sustainable Housing

Building sustainable housing is easier said than done. Although “green building” can become the future of residential construction, breaking down some significant barriers is necessary to make this dream a reality.

  1. Gain More Government Support

The first major obstacle to overcome is getting more support from the government. Many municipalities have restrictive local ordinances that prevent people from building sustainable homes. Ordinances such as density standards and minimum road sizes must update to accommodate more eco-friendly architecture.

Raising demand and awareness are ways to garner more government support. Consumers increasingly demand sustainable products in other industries and the same thing must happen in construction. Groups like the U.S. Green Building Council and Green Building Initiative are doing just that.

The only way local governments are going to change established construction laws is if their citizens make sustainability a top priority. People must educate themselves on eco-friendly construction and force the issue in their town halls. Solving the housing shortage requires hard work from every community member, not just construction crews and government employees.

  1. Mitigate High Material Costs

Sustainable building materials can have a high return on investment in the long run, but their costs are still too high. More contractors need to learn how to use these materials to their full potential. The perceived costs of changing materials are also scaring people away. The demand for this small market sector needs to grow.

Fortunately, the global market size for green building materials is rising. Analysts estimate the market will grow by over $500 billion from 2022 to 2032. North America is the fastest-growing market as the demand for affordable housing, commercial complexes, industrial facilities and connection projects increases.

Growing the eco-friendly construction market requires heightened awareness and education in households, neighborhoods, communities, towns, states and countries — in that order. Everyone has a role to play.

John Willoner's Eco-House at Findhorn. Turf roof, passive solar, solar panel.
An eco-house at Findhorn Ecovillage with a turf roof and solar panels
Credit: W.L Tarbert – Own work

Instead of Building More, Build Better

Haphazardly building new homes and apartments is just a temporary solution to the housing crisis. If people want a permanent fix, they must build better instead of more. Progress will be slow, but creating sustainable communities that coexist with the environment and enable a low cost of living is the only way to ensure affordable housing for the future.

Rose Morrison

About the Author

Rose is the managing editor of Renovated and has been writing in the construction industry for over five years. She’s most passionate about sustainable building and incorporating similar resourceful methods into our world. For more from Rose, you can follow her on Twitter.