Can We Solve the Housing Crisis Without New Construction?

The housing crisis is one of the most pressing challenges facing communities across the country. With rents rising, home prices soaring, and homelessness increasing, many wonder if there’s a way to solve the crisis without undertaking extensive new construction projects. Proponents of this idea argue that better use of existing housing stock—vacant homes, underutilized spaces, and repurposed commercial properties—could provide a solution. But while these strategies can help, they are unlikely to address the full scale of the problem. Here’s why tackling the housing crisis requires both smarter use of existing capacity and a robust commitment to new construction.

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Can Better Use of Existing Housing Stock Solve the Crisis?

At first glance, utilizing existing housing stock appears to be a quick and cost-effective solution. Strategies such as repurposing vacant properties, filling unused bedrooms in single-family homes, and converting office spaces into apartments have gained traction. Here are some key arguments in favor of this approach:

1. Vacant Properties
   There are over 15 million vacant homes in the U.S., according to the U.S. Census Bureau. Some of these properties could be made livable and added to the housing market to ease shortages.
2. Underutilized Bedrooms
   Many single-family homes have spare bedrooms that go unused. Businesses like SpareRoom, which match renters with homeowners willing to share space, could create affordable options for individuals or small families.
3. Office-to-Residential Conversions
   With remote work on the rise, office buildings are sitting empty. Developers and cities are increasingly exploring ways to convert these properties into residential units. A study by the Urban Land Institute estimated that converting vacant offices could add 10,000 new housing units annually in major urban areas.
4. Short-Term Rentals
   Homes used for short-term rental platforms like Airbnb have reduced long-term rental availability in many cities. Policies to limit short-term rentals, such as those implemented in New York City, could help return thousands of units to the housing market.

While these approaches hold promise, they face limitations that prevent them from fully solving the housing crisis.

 

The Challenges of Relying on Existing Housing Stock

1. Mismatch of Supply and Demand
   Vacant homes and office spaces are not always located where they are needed. Many are in rural areas or cities with declining populations, while the housing crisis is most acute in high-demand urban centers. According to a report from the Joint Center for Housing Studies at Harvard University, 70% of vacant housing stock is located in areas with little demand.
2. Zoning and Policy Barriers
   Existing zoning laws often make it difficult to repurpose underutilized housing. For example, single-family zoning dominates 75% of residential land in U.S. cities, preventing property owners from adding accessory dwelling units (ADUs) or renting out extra rooms.
3. Cost of Renovation and Conversion
   Bringing vacant properties or office spaces up to residential standards can be prohibitively expensive. Converting offices into apartments costs between $100,000 and $200,000 per unit, depending on location and infrastructure.
4. Inadequate Volume
   Even if every underutilized space were repurposed, it wouldn’t address the full scope of the crisis. A report by Freddie Mac estimates the U.S. housing market is short by 3.8 million units, far exceeding what existing stock can provide.

Why New Construction Is Essential

1. Meeting the Volume of Demand
   New construction is the only way to build the millions of units needed to address the deficit. The National Association of Realtors reported that the U.S. needs to build 5.5 million new homes over the next 10 years to close the gap.
2. Creating Housing That Meets Modern Needs
   Existing housing stock often doesn’t meet the needs of today’s population. For example, there’s increasing demand for smaller homes, co-living spaces, and senior housing. New construction allows developers to tailor housing for these evolving needs.
3. Boosting Local Economies
   New housing construction creates jobs and generates tax revenue. According to the National Association of Home Builders, building 100 single-family homes generates 394 jobs and $28.7 million in wages.
4. Providing Housing in High-Demand Areas
   Unlike existing housing stock, new construction can be strategically placed where demand is highest—near urban centers, job hubs, and transit lines.

Balancing Existing Stock with New Construction

The optimal solution lies in leveraging both strategies. Repurposing existing housing stock can serve as a stopgap measure, but new construction is essential for long-term stability. Policymakers and industry stakeholders must take a two-pronged approach:

• Encourage Adaptive Reuse: Programs offering tax credits or grants for converting vacant properties and underutilized commercial spaces can incentivize developers. Examples like California’s Adaptive Reuse Ordinance have shown promise.
• Relax Zoning Restrictions: Simplifying regulations for ADUs and mixed-use developments can unlock housing opportunities within existing communities.
• Focus on Affordable Housing: Local governments can mandate affordable housing quotas in new developments or provide subsidies to make projects feasible.
• Promote Public-Private Partnerships: Collaborations between cities, developers, and nonprofits can accelerate housing construction while keeping costs manageable.

The Role of Commercial Real Estate

The commercial real estate sector is pivotal in addressing the housing crisis. Converting underutilized commercial properties—such as offices and retail spaces—into residential units can help close the gap between housing demand and supply. Collaborating with a knowledgeable commercial real estate agent can make these conversions more effective, as they understand zoning laws and market conditions. By leveraging the expertise of the commercial real estate industry, stakeholders can implement innovative solutions to ensure housing is accessible and affordable.

Ultimately, while better use of existing housing capacity is a valuable part of the solution, new construction is essential to meet demand, create diverse housing options, and stabilize the market. Addressing the housing crisis requires a balanced and comprehensive approach—one that builds for the future while making the most of what we already have.