A Shortage Of Housing And A Glut Of Bedrooms

We complain constantly about a lack of affordable housing. But there are 137 million spare bedrooms in the United States. We should make at least a few of them available for their intended purpose.

Here’s a paradox that pandemic revealed:

We have a shortage of housing in the United States and housing prices went up a lot.

But at the same time, it turns out that we have a lot of extra bedrooms. In fact, we have 137 million extra bedrooms.  

But we’re not using the bedrooms to house people. We’re using them as storage, as guest rooms, and increasingly post-pandemic as home offices.

The bottom line is that even as our housing crisis grows, we’re building fewer houses. And they tend to be bigger houses for affluent people, who are older and don’t move very often.

The traditional turnover in housing has almost completely stopped and that’s leading to less housing opportunity, especially for younger folks and people of modest incomes.

We Have Way More Spare Bedrooms Thank We Used To

We all know that homebuilders are building bigger houses than ever before – at the same time that the size of most households is shrinking.

ApartmentList recently did a deep dive into Census data  and came up with some pretty starting statistics.

In 1970, the percentage of households with at least three people and the percentage of houses with three or more bedrooms was about the same: around half.

Today, 63% of houses have three or more bedrooms but only 38% of households have three or more people.

  

Now think about how that translates into bedrooms. As ApartmentRent’s research documented, the number of spare bedrooms is exploding. About 60% of all houses in the United States have at least one spare bedroom, up from 40% in 1970. About 30% have at least two spare bedrooms – triple the number in 1970.

And, not surprisingly, these spare bedrooms are not available equally to everybody. ApartmentList’s research found that 80% of married couples with no children at home have an extra bedroom. By contrast, 30% of households with children at home don’t have enough bedrooms. This same split is evident, not surprisingly, among owners and renters.

Most Bedrooms Are Owned By Older Folks

And here’s an even more startling statistic from the Opportunity Inclusive Growth Institute at the Minneapolis Fed: Most bedrooms in owner-occupied houses are owned by people at least 50 years of age. The raw number would be startling enough, but the graph shown below really highlights the problem: Not only are most bedrooms owned by older folks – but the older folks aren’t using the bedrooms (pay particular attention to the blue).

Source: Minneapolis Fed

Meanwhile, Nobody’s Moving – Except People Getting Divorced

This mismatch between households and bedrooms might be okay if people were moving around when they hit different stages in their life. It would make sense, for example, for older folks to downsize once their kids are gone and/or when their spouse passes.

But that’s not happening. As the Census Bureau has documented, moving rates dropped during the pandemic to among their lowest rate ever – and they’ve stayed that way since. (Meanwhile, the number of home improvement projects skyrocketed.) The biggest reason people move nowadays is that they are getting divorced. Old folks stay put, even when they’re overhoused. I ran into this repeatedly when I was in elected office in Ventura. One day I ran into a 70-year-old guy who had just moved back from Georgia and was moving into his childhood home to take care of his 96-year-old mother, who wouldn’t move out.

There are also a bunch of financial reasons people don’t move. The most obvious – and publicized – one is that a lot of homeowners are now locked it at very low mortgage interest rates that they don’t want to give up. But another reason, as the Minneapolis Fed paper pointed out, is property taxes. This is especially true in California, where Proposition 13 essentially locks in the property tax bill at the time of purchase. The longer you own your home, the lower your property tax bill is going to be. But it’s increasingly true in other states offering property tax relief to older folks.

So How Can We Unlock All Those Extra Bedrooms?

There’s nothing inherently wrong with having extra bedrooms and using them as workspace so long as there are plenty of other places for people to sleep. Unfortunately, while we’re converting bedrooms into workplaces really fast, it’s much harder to convert workplaces (i.e., office buildings) into bedrooms.

But surely we can find ways to unlock at least some of those extra bedrooms to give more people places to live!

The most obvious way is for overhoused people – especially if they are financially stressed – to rent out their extra bedrooms. This is not a new idea; some single women who own homes have always run what amount to boarding houses. But finding trustworthy tenants and time and cost of the transaction has always been a problem. However, apps like Padsplit.com might disrupt this whole work just as Uber and AirBNB disrupted their worlds.

The bottom line is that it’s a lot easier and cheaper – from society’s point of view, if not from the point of view of the individual – to rent out an extra bedroom than it is to build new housing of any kind. And with 137 million spare bedrooms lying empty, we need some innovation here.