Housing markets in the United States continue to adjust from the effects of
a housing bubble, its collapse, and the slow recovery from that collapse.
This paper will employ data at the tract level from the American Community
Survey for the 383 Metropolitan Statistical Areas of the United States. The
research finds that both the market for owner-occupants and the market for
renters experienced growth of the supply of units that outpaced the demand
for those units. The problem of excessive supply has abated somewhat in
the last five years, but the problems of surplus housing continue to be a
problem for most markets. Vacancy rates remain at high, perhaps
unhealthy, levels. There is a paradox in the market in that, despite
surpluses of housing, prices continue to rise faster than inflation and faster
than the incomes of the households. With prices rising faster than incomes,
housing affordability problems are expanding. The problems of high vacancy
rates varies widely across the metropolitan areas of the nation and across
the various submarkets of housing defined by price strata. Most markets
suffer from shortages only in rental markets at the lowest price levels. The
process of filtering non-viable units out of the system does not appear to be
working well. Vacancy rates are above optimal levels in most neighborhoods
but are highest in the most distressed neighborhoods. These market
dynamics call into question some of the policies and programs of the federal
government which seek to expand the supply of low-cost rental housing
when many of these markets are in surplus.