We wanted to know why affordable housing shortages persist in many communities. The article offers an explanation of the effects of increased purchasing power and decreased input costs on the price and quantity of housing units. While we cannot tell you specifically how to address the affordable housing shortage in your community, we hope to provide you with a better understanding of your local housing market. The first step in understanding affordable housing issues in your community is to understand the difference between market demand for housing and housing need. Each individual or household in a community selects housing based on a variety of factors, such as style, size, lifestyle choices and location.
Price also plays a critical role in housing selection.
Each household has budget constraints, which determine how much the household can afford to pay. Based on both individual preferences and budget constraints, each household has a demand for housing. In a given community, the market demand for housing is the sum of each individual household's demand for housing. The concept of housing need is different. It is based on community or societal standards rather than on the level of demand in a competitive market.