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Bank of America housing analysts say that “underbuilding” of U.S. homes over the past decade has not only “absorbed the 2 to 3 million home glut from pre-financial crisis overbuilding” but has also created a “deficit of 4 million” U.S. homes.
Simply put, Bank of America analysts say we went from an overbuilt nation to an underbuilt nation over the past decade.
“The most direct solution for the housing shortage problem is to build more homes,” wrote Bank of America analysts in a paper published this fall, which examined the markets that are—and aren’t—addressing the “deficit.”
In the paper, Bank of America did an analysis (see chart above) looking at building permits issued as a share of the local population. Perhaps not surprisingly, the analysis found that major Sun Belt markets are adding housing units at the fastest clip, while many slow population growth markets in the Northeast and Midwest are lagging behind.
Bank of America also analyzed where home construction is—and isn’t—keeping pace with population growth.
“We identify which cities in the U.S. are more likely to have the biggest longer term housing shortages by analyzing near real-time migration flows based on the Bank of America internal data and total housing stock. Our analysis suggests that in 2Q, San Antonio, Dallas, and Orlando have the most constrained housing supply as buoyant labor markets continue to attract people,” wrote Bank of America housing analysts. “On the flip side, St. Louis, Detroit, and Miami seem to have the highest housing stock relative to their population.”