14 Housing Strategy | ENVISION FRANKLIN NATIONAL HOUSING TRENDS Franklin’s experience with high demands for housing, short supply, and rising housing costs is not unique. Around the country, many communities have been facing an acute shortage of homes both for rent and sale. The current undersupply of housing is largely a result of the failure to build enough new homes. The result has been increasingly unaffordable housing costs for families across the nation. When much of the nation shut down in response to the COVID-19 pandemic in March 2020, the housing market came to an abrupt halt. As restrictions eased, a pandemic housing boom emerged as those who could work remotely spread out in search of more space in more affordable communities across the country. Housing prices and rents escalated with the rising demand. Existing homeowners enjoyed record-high levels of home equity.v In 2023, rising interest rates, inflation, affordability challenges, and slowing population growth have tempered post-pandemic housing markets. Yet with an ongoing shortage of housing, housing costs are still high and record numbers of renters are severely cost-burdened. Home prices are unlikely to return to prepandemic levels, at least in the near term.vi Higher borrowing costs meant that single-family homebuilding declined significantly in 2022. Multifamily construction continued to rise in 2022, particularly for more expensive high-end units. With limited available inventory, early 2023 saw the number of homes available for sale reach historic lows. Rising interest rates have put a damper on would-be buyers, and created conditions where older adults are less likely to move. Home builders continue to encounter high construction costs and limited lot availability, yet, the low housing inventory is maintaining a strong demand for new homes and pushing would-be buyers to stay in rental units.vii At this time, there is also a need to better align housing stock with demographic trends. Deflating demand for new single-family homes is a shrinking number of households with nuclear families, as well as rising multigenerational or group living arrangements plus aging in place.viii One approach gaining in popularity to address current housing needs is the prospect adding “missing middle” housing to communities. “Missing middle housing,” a term coined by Dan Parolek, founding principal at Opticos Designs, Inc., refers to house-scale buildings with multiple units—compatible in scale and form with detached single-family homes—located in a walkable neighborhood. These compact, low-rise options, typically 2 – 12 units in size, offer an important option between more expensive single-family detached homes and high-rise apartment buildings. In “The Great Senior Short Sale,” a journal article by urban planning and real estate expert Professor Arthur C. Nelson, he describes troubling misalignment in the real-estate market as 76 million baby boomers age out of large single-family homes, and fewer households in younger generations that prefer these housing types, even if they can afford them.ix Image Credit: Opticos, Inc
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