The Housing Underproduction Crisis in the Hudson Valley

By   |     |  Hudson Valley Real Estate Market

Just a few years ago, sellers were ditching their homes in droves and lines of buyers were battling to snatch them up. Housing inventory was plummeting and there was a growing need across the country to build more homes to buy or rent to address the demand. But this shortage of new homes is much bigger than this short-term demand spike. According to Up for Growth’s 2022 report, “Housing Underproduction in the US,” the country is 3.8 million homes short of meeting housing needs, double the number from 2012. Experts say it’s a crisis that needs to be addressed quickly.

“This housing crisis that the nation is facing is not a crisis that has just popped up over the last two years—its decades in the making,” says Mike Kingsella, the chief executive officer of Up for Growth, a national, cross-sector member network committed to solving the housing shortage and affordability crisis through data-driven research and evidence-based policy. (On November 9, Kingsella gave the keynote address at RUPCO’s annual community luncheon in Kingston on the topic of housing underproduction in New York.)

The Problem of Zoning

So how did we get here? According to Kingsella, there are a variety of reasons, with difficult zoning laws at the top of the list. “You can’t just build homes anywhere, and a lot of open land is zoned for agricultural or industrial use,” explains Kingsella. “So if a builder wants to get a permit and build a home, they have to seek a rezoning and that is particularly difficult to get. In Rome, New York, it took one developer, who wanted to build a 55-unit affordable housing community, 10 years from proposing the project to finally being able to get the approval from the city, because of rezoning.”

And the concept of building new homes just because there is ample open land sitting further outside a local area, is an even bigger challenge. “We need to encourage more homes to be built near jobs, in walkable town centers, so that being able to afford a home also doesn’t mean they have to commute an hour,” says Kingsella. “We’re focused on the problem of how do we get more homes, but they need to be in the right places, where people want and need to live in order to have quality of life and be able to achieve economic resilience, and in order to be connected to the communities in which they work and participate.”

Once a builder is ready to go, it still doesn’t mean they can. “There are four elements that are the essential ingredients to housing production—land, labor, lumber, and lending,” said Kingsella. “Lending capital for housing production is at all-time highs, but we’re facing a severe shortage of skilled and trained workforce across the country and then there’s also a shortage of lumber and building materials.”

Once homes are built, it doesn’t guarantee that someone can even afford to rent or buy them. This might seem odd after such an intense few years of bidding wars and a long line of potential buyers ready to plunk down their savings for a place.

“Several decades of wage stagnation and widening income inequality means that there are a lot of Americans, and a lot of New Yorkers, who can’t afford homes, no matter how abundant those homes are, or how quickly or cheaply they’re built,” says Kingsella.

Troubling Local Trends

Compared to national statistics, the Hudson Valley is actually faring much better when it comes to housing underproduction, but the area is still facing a decline.

“In 2012, Poughkeepsie and Newburgh had a marginal surplus, but Poughkeepsie now faces an underproduction that’s a little north of 5,500 homes,” he says. “Kingston, Buffalo, Utica, Rome, Albany, Schenectady, and Troy, all of these metros had housing surpluses in 2012 and are now trending toward underproduction. These trends are a bit troubling.”

What do all of these numbers really mean? If an area has a shortage of 200,000-plus homes, does that mean that 200,000 people are waiting somewhere for a home? Or there are 200,000 homeless people in that area? And if homes and apartments are needed to be built, why do some homes and apartments stand vacant? “Inventories are so low that people don’t have the next place to go. It’s like a game of musical chairs and people started to pull away the chairs,” says Kingsella. He also explains that it means that more unrelated persons are doubling and tripling up in individual housing units, instead of buying or renting their own place.

A Need to Change the Rules

So, what’s the solution both locally and nationwide? Kingsella says that changing zoning laws is key to stopping this crisis. “We really need to focus on local and state governments and what policymakers working at those levels can do to address our severe and growing housing underproduction,” he said. “Zoning is imminently within the grasp of state and local officials and if we can change the rules in terms of where and how much housing can legally be built, we can move the needle in a significant way.”

Kingsella says that housing is foundational to healthy, thriving, sustainable, and prosperous communities. “This data shines a light on the challenges, but also the opportunity to really enact intentional policies that are going to break down barriers so that communities can thrive.”

To read the full report, visit Up for Growth’s website.

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