Riverside-San Bernardino Most Undersupplied Housing Market in US

Affordability is crimping the progress that home builders have made recently to satisfy the current and future demand of all housing types nationwide.

It is estimated that America needs 17.1 million homes this decade and the industry started 1.71 million homes in 2021 and 1.65 million homes in 2022.

But they will fall far short this year, although they will finish many of those homes and offer them for sale or for rent sometime in 2023.

Chris Porter, senior vice president, chief demographer, for John Burns Real Estate Consulting, writes that Riverside-San Bernardino; West Palm Beach; Tampa; Phoenix; and Fort Worth were the most undersupplied markets in the country based on current vacancy rates lower than their historical norms.

He also measured markets based on overcrowding conditions, measuring the number of adults per household in every age category compared to historical norms. Here, the five most undersupplied markets using this methodology are in California: Riverside-San Bernardino; Sacramento; Oakland; Anaheim; San Diego

“These markets are seeing softening rents and declining home prices right now because, although undersupplied, many aspiring homeowners and apartment dwellers can’t afford the homes,” Porter said in prepared remarks.

Lack of Developable Land a Key Factor

Porter said when evaluating housing demand and supply imbalance important factors such as lack of developable land (especially in New York and San Francisco) and poor affordability (even in historically affordable markets like Charlotte and Nashville) are often left out of the discussion.

“Different local housing dynamics mean the balance between these two housing fundamentals does not play out the same everywhere,” he said.