How We Got Ourselves Into a Nationwide Housing Shortage

Here’s why the nation is in the midst of a major housing shortage.

There’s been a nationwide housing shortage going on for a while now, so today I’m going to be breaking down the statistics behind the local, state, and national lack of inventory.

In the 1970s, 17 million houses were built nationally. The 1980s had 15 million, the 1990s had 13 million, and the 2000s had 16 million. If we calculate the average of these four decades, we see that there were around 15.25 million homes built per decade. From 2010 to 2019, however, we only built 10 million houses.



Here’s what makes this a big problem: Over those four decades, for every one million Americans, there were 45,000 houses built. Over the last decade, though, there were only 21,000 built per one million Americans.

“There’s just not enough supply to meet demand.”

When Gavin Newsom took office in California, he vowed that 3.5 million houses would be built by 2025—in other words, 440,000 houses per year for eight years. Over the last three years, however, only 100,000 were built each year. Needless to say, there’s a major shortage here. Statistics show we’re short by anywhere from one million to three million homes.

Let’s now dive into our local market and look at how median prices have changed in the counties of Sacramento, Placer, Yolo, and El Dorado over the past five years. In 2017, the median price was $335,000. It rose to $380,000 in 2018, $385,000 in 2019, $420,000 in 2020, and $460,000 in January 2021. Today, it’s around $550,000.

We’re short by around four to six million homes on a national level and one to three million on a state level. It can take decades to catch up on this kind of shortage, and it’s easy to see how it affects our local market—all you need to do is look at how much home prices have skyrocketed.

This is also why the housing market will remain strong unless there’s some sort of meltdown. There’s just not enough supply to meet demand. If you have any questions or would like more information, feel free to reach out to me. I look forward to hearing from you soon.