The State Economies Getting Crushed by the Housing Crisis

"Since the beginning of the COVID-19 pandemic, home prices in the United States have climbed twice as fast as incomes. Now, millions of Americans are effectively priced out of the market. Surging home prices are due in large part to a historic housing shortage, estimated to be as high as 4.7 million units. While the ongoing housing affordability crisis has grown especially pronounced in the last five years, the causes of the supply shortage can be traced back nearly two decades."

"During the Great Recession, which lasted from December 2007 to June 2009, home prices fell by nearly 14% in the United States. Home prices continued to fall for years after the recession officially ended, bottoming out in February 2011 25% lower than the pre-recession high reported in July 2006, according to the Case-Shiller index. Because of the recession's impact on the housing market, many Americans were hesitant to invest in a home, and the number of skilled laborers in the home building sector fell sharply."

Since the COVID-19 pandemic began, U.S. home prices have climbed twice as fast as incomes, pricing millions out of the market. A historic housing shortage, estimated as high as 4.7 million units, has driven much of the price surge. The supply shortfall traces to underbuilding after the Great Recession, when home prices fell nearly 14% and then 25% below the 2006 peak by February 2011. Recession-related hesitancy and a sharp decline in skilled construction labor reduced new home construction to historic lows: 6.8 million housing starts in the 2010s versus 12.3 million in the 2000s. The shortage produced broad economic costs—over $430 billion in lost output, $246 billion in lost wages, and 3.2 million lost jobs between 2008 and 2025. State-level losses were assessed as shares of annual GDP using 2024 BEA figures.

Read at 24/7 Wall St.