Why aren’t more houses being built and what to do about it

There is a housing shortage. By now, this is not news. It has caused housing prices to skyrocket, and made it difficult for people to find a place to live. We will look at some of the reasons for this housing shortage, and offer a solution to this problem that is becoming increasingly popular.

Why aren’t more houses being built?

We know about the housing shortage, but many of us are not as clear about the cause. Don’t builders build houses for a living? Shouldn’t that take care of the problem? It turns out there are a lot of factors that have led to this.

History of the national housing shortage

2008 was a turning point for the US housing market. The 2008 housing bubble (when home prices reached an all-time high) burst and the resulting economic downturn led to widespread company closures and job losses. With few people spending money, the number of new homes being built plummeted. This in turn caused many construction companies to close, and their employees left to seek other employment.

Although the economy has since recovered, the workforce involved in building houses has not. The 2008 recession led to a large number of construction workers leaving the industry, and there has been a significant decrease in the number of people entering the field. As a result, there remains a scarce workforce available to build new homes. The demand returned, but the capacity to fulfill it did not. As a result, new home construction was significantly lower than it might have been. Over the intervening decade plus, the demand continued to outpace the supply, which brings us almost to the present day.

How the pandemic affected new construction of homes

The COVID-19 pandemic didn’t help. Mandatory shutdowns meant that construction workers were not able to work. Shutdowns also meant that many people in all sectors lost their jobs. Some changed their line of work to a business that was not as affected. Others just left the workforce altogether. During the first months of the pandemic, people couldn’t easily move due to government restrictions. Even when that was not a concern, few had the desire or ability to move, due to factors like increased anxiety and decreased funds.

All this together caused another decrease in new housing starts. According to the National Association of Home Builders, “builder confidence in the market for newly-built single-family homes plunged 42 points” in the month of April, 2020. That was the largest monthly change they had ever recorded.

Few homes were started during the pandemic. And the backlog of work that existed before the pandemic remained, with fewer contractors available to meet the need.

If it was hard to find skilled labor after the 2008 crash, it is even harder now.

2021 economy intensified the housing shortage

The 2021 housing boom was something to behold. People were ready to move again, but the housing shortage remained. This caused a record low inventory of available homes – whether new or not. Home prices skyrocketed.

However, low interest rates put in place to help the economy recover were too much for buyers to resist. They met the sellers’ demands and routinely battled competitors by offering significantly more than the asking price and closing deals before the homes ever hit the market.

Low interest rates and high demand for private lodging caused many who were able to get second homes or income properties. More houses coming off the market, and nowhere near enough were being built to take their place.

The current economy isn’t helping

Today, there remains a housing shortage and home prices remain high. In addition, mortgage rates are rising and the overall economy is on a bad trajectory, so a new home purchase is becoming out of reach for many. And for those who can afford to build one, the chances of finding land, a contractor who is available, a permit that is accessible, and building materials that will arrive on time are next to zero.

A solution for today

There are no quick solutions to the national housing shortage. But that doesn’t mean you are stuck in your current home. Many of our clients are finding ways to improve their housing situation by renovating their current home, adding on, or starting over.

Renovating Your Home

Renovation can include anything from updating a room to finishing an unused basement or attic to add more usable space. Some work with an architect or interior designer to exploit every available option, while others choose the DIY route. Whatever you decide, it can be helpful to see it before you do it. Architectural renderings can help you evaluate the big picture or dial in the smallest details.

Adding On to Your Home

This could mean adding new living space by building up or out from your current house. Or it could mean adding auxiliary spaces like a pool, guesthouse, fire pit, or other outdoor amenities usually found at resort destinations. Not only do these options increase your home’s resale value, but they turn it into a place you won’t want to leave!

Rebuilding Your Home

This is a much more ambitious option, but it’s one worth considering. Land is increasingly scarce and valuable, so if you already own some it might make sense to start over on the property you already own. This option gives you a blank slate with complete control over your home’s design, layout, and materials. And like the other options, we can help you visualize it before a single brick is laid.


There are many reasons for the housing shortage and unfortunately, there are no easy solutions. However, there are options available to you if you’re not happy with your current housing situation. And for many, it’s a blessing in disguise. The pandemic caused many of us to spend more time at home, whether because of lockdowns, new work arrangements, or discomfort traveling. But staying at home doesn’t have to mean being stuck at home. You can make your home the place you want to be. Why not turn your house into the home of your dreams?


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