Many people view the apparent ‘housing shortage’ in the Denver metro area as exemplified by the growing number of unhoused residents. Some cite this increase as evidence of the so-called ‘housing shortage’.
But are there really not enough properties available for rent or purchase to house everybody? Will building more and more primarily luxury housing units mean everybody will finally have a roof over their heads?
The answer: There is already enough physical housing available! In that sense, there is NO housing shortage in the metro or in the country.
In fact, Denver has over 9 vacant homes per unhoused resident!
But somehow, some people still do not have a roof over their heads.
Click on table for interactive version.
Key Facts:
- By looking at HUD data and US Census data, it is clear that the so-called ‘housing shortage’ in the Denver area and in the USA is not due to a shortage of vacant housing. (Not all vacant housing is offered for rent. We will sort that out below.)
- There is more than enough vacant rental housing to accommodate all unhoused citizens in the country. There is no shortage of physical housing.
- In first quarter 2024, there were approximately 3.1 million unoccupied housing units for rent in the US but ‘only’ 653,000 homeless residents in the US. There are almost 5 rental units available for every unhoused resident in the country!
- More than 24,000 apartments were empty at the end of 2023 in the Denver metro area and 108,000 were under construction or proposed compared to the 7,300 metro area peak unhoused count. Again, many rental properties are available per each unhoused resident in the region.
- Obviously, continuing to build mainly luxury rental housing has not fixed the ‘housing shortage’ as demonstrated by the fact there is already a huge excess of vacant residential properties in the metro area compared to the peak count of unhoused residents.
- Believing supply-and-demand zealots who shill for developers will not result in effective public policy because there is already an excess of vacant residential properties which proves that simplistic supply-and-demand theory is not as simple as these zealots would have everyone believe.
Instead, it will contribute to the decimation of our wildlife and environment.
Lakewood City Council has the authority to intervene via eminent domain. Instead, they appear dedicated to the enrichment of already-wealthy land developers. WHY?
It is a mystery that should be explored.
The income pyramid implies that building more high-rent units may improve affordability at the top of the pyramid. But the chart shows that most folks with income at the top can already afford 99% of the units on the market. So building even more high-rent units only benefits around 20-30% of the citizens who are at the top of the income pyramid and who can already afford the existing high end housing that is available.
But 20-25% of the residents or households cannot afford any of the housing that is available. That is where the housing shortage is real. It is not about the housing supply. It is about affordability at the low rungs of the income pyramid. Simply building more and more market-priced units does not address the low-income affordability gap.
Various factors contribute to the low-income affordability gap. Landlords are usually willing to leave surplus units vacant rather than discount the rent to bridge that affordability gap. And developers typically prefer to build luxury units because the relatively small incremental cost to do so is justified by the higher rent that can be advertised. The cost of new construction typically requires some form of taxpayer-subsidy to help pay for building additional low-income housing.
To make progress on the affordability front, policy makers need to be able to say ‘NO’ to the simplistic supply-and-demand zealots who seem to think every housing unit is an identical commodity unit-of-trade. Without getting past that distraction, entertaining effective policy approaches will be out of reach.
