Housing

Emerging trends in the housing sector point to the critical role that planners will likely play in future decades. Planners may want to use these trends as input for their long-range and current planning processes, to practice strategic foresight during community visioning processes, for scenario planning, or simply to inform future decision-making.

Trend Timeframes

The trends are structured in three timeframes, which indicate the urgency of planners' action:

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A worsening affordable housing crisis

The U.S. currently faces a substantial housing deficit of 3.9 million units, and the situation is deteriorating. By 2025, developers predict a significant drop in affordable housing production, largely due to escalating costs and increasing interest rates. A "production cliff," caused by construction delays and setbacks, is expected to result in fewer new homes entering the market. There is also a severe lack of 7.3 million rental homes affordable for those with extremely low incomes. Additionally, nearly 30 percent of American households consist of single individuals, a record high, which adds further pressure on the housing market.

In urban areas, housing availability has slightly increased due to population decline. Suburban areas, however, have seen a 4.5 percent increase in housing underproduction, and small towns are facing a significant challenge with a 47.8 percent rise in housing underproduction. Addressing these critical issues requires a concerted effort to expand the nation's housing stock.

Aging U.S. housing stock

The U.S. is currently facing the challenge of an aging housing stock, despite a surge in home remodeling during the pandemic. As of now, the median age of the nation's owner-occupied houses is 40 years. This aging brings with it an increased need for critical maintenance, renovations, and upgrades. Approximately half of the owner-occupied homes were constructed before 1980 and are now encountering issues such as limited access to water, escalating energy costs, faulty plumbing systems, poor ventilation, and deteriorating roofs.

In 2021, it was reported that 2.8 million owner-occupied homes (which accounts for 3.4 percent of such homes) and 3.9 million renter-occupied homes (8.4 percent) were considered to be moderately or severely inadequate. Moreover, deferred maintenance has resulted in over 450,000 vacant homes in rural areas either being abandoned or falling into disrepair. To address these issues, housing programs are being implemented, focusing on proactive inspections and rehabilitation initiatives. These programs are designed to encourage homeowners to undertake timely improvements to their properties.

Rising homelessness

Due to various contributing factors — a rise in migration, the gradual cessation of pandemic assistance programs, increasing inflation, and escalating housing expenses — the U.S. saw a concerning increase in homelessness from 2022 to 2023. The statistics are alarming: a record-high 653,104 people were without homes in 2023, a 12 percent increase over 2022 numbers. There are indications that the situation may continue to deteriorate. Numerous communities are now grappling with an unprecedented influx of individuals facing homelessness for the first time, including older adults and newcomers to the U.S., which is putting a significant strain on the capacity of existing support systems.

For inspiration on how to think outside the box to come up with solutions for homelessness, read the March 2021 Planning article "Nontraditional Housing Types Can Help Solve U.S. Homelessness Crisis." For a recent success story, check out the January 2022 Planning article "Struggling Hotel Becomes Housing for People Experiencing Homelessness."

Increased numbers of cost-burdened renters

The share of renters paying more than 30 percent of their income for housing expenses is expected to continue to increase. About 40.6 million U.S. households spent more than 30 percent of their incomes on housing in 2021, an increase of 3.4 million from 2019, according to a new analysis from the Joint Center for Housing Studies (JCHS) of Harvard University. Many households are priced out of high-amenity, high-opportunity urban neighborhoods. A lack of affordable housing fuels urban expansion and planning responses have reinforced the same market dynamics.

In 2022, the situation reached unprecedented levels, with half of all renter households in the U.S. experiencing cost burdens. This peak represented about 22.4 million renter households, each spending over 30 percent of their income on rent and utilities, marking an increase of two million households within just three years. Moreover, within this group, 12.1 million households faced severe cost burdens, allocating more than half of their income solely for housing expenses, which also set a new record.

Parking minimums elimination

Eliminating parking minimums lowers the cost of building new housing, which is urgently needed given the persistent housing crisis. This movement has been trending in the U.S. for several years; according to the Parking Reform Network, more than 1,400 cities have eliminated parking requirements in some portion of their cities, with at least 40 abolishing or reducing parking requirements citywide.

Examples include San Jose, the biggest city to approve the removal of parking minimum requirements, and Austin, Texas, which in 2023 passed a resolution to remove all mandatory parking requirements on new developments.

Expanding government initiatives

Policy initiatives and funding led by local, state, and federal governments are increasingly being implemented as solutions to U.S. housing challenges. At the local level, New York City has announced a plan to build 100,000 new homes over the next 15 years, providing significant support for its residents and workforce. Similarly, Los Angeles has approved the development of an additional 135,000 units in its downtown and Hollywood areas. In Hawaii, an executive order has been issued to ease certain laws, paving the way for the construction of thousands of homes for people across all income brackets. Other states, including Delaware, Utah, Arizona, and Rhode Island, are also actively addressing the housing crisis. However, these state and local efforts, such as California's Senate Bill 406 aimed at simplifying the California Environmental Quality Act to fast-track affordable housing projects, and Minneapolis' comprehensive plan to boost affordable housing production, have faced opposition from environmental groups.

At the federal level, the Biden administration has rolled out new measures to tackle the housing crisis, which include $85 million in grant funding. These initiatives are focused on zoning and land use reforms, lowering barriers, enhancing financing for energy-efficient and resilient housing, and encouraging the conversion of commercial properties into affordable and zero-emissions residential units. Additionally, fair housing planning and enforcement are receiving increased attention. The U.S. Department of Housing and Urban Development proposed a new Affirmatively Furthering Fair Housing rule in 2023 to meet the requirements of the Fair Housing Act of 1968. These measures demonstrate a concerted effort to fight against housing discrimination and actively foster inclusive communities.

Coliving

While coliving has long been a trend in the rental housing arena, cohousing and home sharing are increasingly becoming options for many looking to purchase a house, but who cannot finance it on their own. While often similar in structure to traditional subdivision developments, these types of communities feature novel ownership structures that improve affordability and access for people who may otherwise be unable to purchase a property on their own.

Planners should be prepared for the zoning and land use impacts of these trends in coliving, cohousing, and cohabitation. For more about the potential zoning implications, check out the November 2022 issue of Zoning Practice, "Coliving: An Old Idea is New Again."

Multigenerational living

In the U.S., young adults today are much more likely to be living within a multigenerational household than 50 years ago. According to the Pew Research Center, 17 percent of adults aged 25 to 34 live in a parent's home and an additional eight percent live in another type of multigenerational living arrangement.

A variety of social and economic pressures are driving this change, including student loan debt, rising housing and rental costs, increasing costs of goods and services, and the cost of elder care. These challenges offer opportunities for planners to support intergenerational approaches to community planning, including multigenerational housing. With economic and societal changes driving the increase in multigenerational living, planners should be prepared for local impacts in the form of new building typologies, new amenities, and the need for new services catering to mixed and intergenerational households.

Corporations as landlords

Large private corporations are playing an increasingly direct role in the purchase of affordable housing and rental stock. In 2021 and 2022, the top private equity firms owned more than one million apartments in large, midsized, and small cities and communities across the nation. After purchasing properties, many firms seek to maximize their profits through cost-cutting, additional fees for rental agreements and payments, and aggressive evictions followed by major rent increases. Should this continue, communities may see a reduced stock of affordable housing and increased homelessness. Planners should be prepared to recognize these trends at the local level and work to ensure housing accessibility and affordability for all.

Major tech companies have started to invest in affordable housing programs in communities near their operations. This currently includes research and development for factory-built homes, as well as financing or contributing to local affordable housing efforts. Private-sector involvement in housing requires input from planners, who can provide insight into the root causes of displacement and gentrification. Planners will also need to advance equity, health, sustainability, and economic development principles to support and complement the creation of affordable housing.

Tenant grassroots organizations

The role of private equity in the housing market has been expanding swiftly, capitalizing on the current housing crisis and, in some instances, intensifying it. As these large corporate landlords gain more influence, tenants are uniting and adopting innovative strategies to challenge them financially.

These approaches include bringing their grievances to regulatory authorities and targeting public retirement funds, which are significant investors in private equity. By directing attention to these investment sources, tenants are aiming to influence the practices of private equity firms in the housing market.

Commercial-to-residential conversions

The option to work remotely in the U.S. resulted in a decrease in office space occupancy and turned many downtown areas into ghost towns. As cities and employers continue to struggle to attract office workers to business districts, many communities are considering the potential for commercial-to-residential conversions. Large-scale conversion of office space to residences is a complex and costly undertaking, but innovations are bringing these costs down. Cities will have to consider how office-to-residential conversions factor into their zoning reform efforts.

In October 2023, acknowledging the potential of addressing housing issues, the Biden-Harris Administration released a guidebook on this topic. This comprehensive resource offers an overview of the various federal programs, including loans, grants, guarantees, and tax incentives, specifically designed to support the conversion of commercial properties into residential spaces.

Increasing gentrification and displacement

A confluence of factors, including housing cost and availability, is driving housing displacement in cities across the country. Involuntary displacement due to gentrification often leads to a decrease in racial, ethnic, and economic diversity. This loss of diversity can limit a city's economic resilience and potential for economic growth.

For more on how new trends and disruptors are affecting this evergreen planning topic, refer to the February 2022 Planning article "The Changing State of Gentrification." To learn more about strategies to prevent displacement, check out the November 2019 Planning article "What to Do About Displacement?"

Growing housing needs of refugees and immigrants

The growing arrival of refugees and immigrants in the U.S. has led to an increased demand for housing, especially in major cities. As the number of newcomers rises, local governments face the daunting task of managing this influx. In response, cities such as Chicago and New York have resorted to temporary measures.

However, there's a pressing need for the development of permanent housing infrastructure to adequately integrate these new arrivals. The situation is further complicated by issues of NIMBYism, as community members resist the accommodation of refugees and the allocation of funds towards migrant support. This difficult situation highlights the critical need for collaborative efforts at all levels of government to effectively address the housing requirements of newcomers in the U.S.

Tiny homes

Tiny homes, which are compact living spaces typically ranging from 100 to 400 square feet, are increasingly becoming a popular housing option. By 2028, it is projected that the global market for tiny homes will reach $25 million (USD), growing at an annual rate of 3.5 percent. In 2023, Portland, Oregon, took a significant step by establishing its first large-scale tiny home community, aimed at providing expedited access to housing for about 200 residents. Additionally, San Luis Obispo in California has introduced a tiny home prototype and plans to bring 20 tiny homes into a historic part of the city.

These tiny homes are appealing for several reasons: they offer a more affordable housing option, they are sustainable, and they align with minimalist living principles. Advocates of tiny homes highlight their affordability and environmental benefits. However, there are concerns about the rapid adoption of these homes without thoroughly understanding the potential impacts on land use. The role of tiny homes in addressing housing crises and homelessness continues to be a topic of discussion. The challenge is further compounded by existing city and county land use regulations, which can either complicate or outright prohibit the legal development and habitation of tiny houses and micro apartments.

3D-printed housing revolution

The private sector is developing new ways to reduce supply constraints, lower costs, and grow housing availability. 3D printing of homes is an emerging trend that has the potential to disrupt the home building industry and reduce the time and complexity involved in new construction. The production of the first two-story 3D-printed houses in Houston and the groundbreaking Genesis Collection community of 3D-printed homes in Georgetown, Texas, demonstrate the accelerating progress in 3D-printing technology for construction.

The materials used to build these structures are as diverse as the applications, ranging from conventional concrete to alternatives like recycled plastic, mud, and waste materials from rice production. As the trend advances, it signifies a transformative moment in construction technology, offering swifter, more cost-effective building methods and holding vast implications for housing accessibility, affordability, and disaster response.

APA's foresight research is made possible in part through our partnership with the Lincoln Institute of Land Policy.