A growing body of research estimates that the US faces a severe housing shortage, with missing homes numbering between 3.8 million and 8.2 million. Using the midpoint—approximately six million missing homes—new AEI Housing Center analysis shows where this shortage is most acute and why about two million missing homes can be traced back to California and its neighbors.
To pinpoint local shortages, our analysis distributed the estimated six million missing homes across counties based on each area’s median price-to-income ratio—a proven proxy for housing affordability. By applying this method, the analysis produced a national shortage estimate of 5.8 million homes across the lower 48 states.
Yet the analysis didn’t stop at a national average. It also calculated what the shortage would have been if California and ten other high-cost western states—Washington, Oregon, Idaho, Montana, Nevada, Utah, Wyoming, Colorado, Arizona, and New Mexico, which we dub the California “blast zone” states—had mirrored the housing shortages of the other 37 states (2.6 percent on average). That hypothetical baseline suggested the shortage would have been only 3.8 million homes nationally.
The two million homes difference represents the excess shortage driven by California and its western peers. California alone accounts for an estimated 1.4 million homes of this excess shortage, making it the single largest contributor to America’s housing crisis. The other 10 blast zone states contribute another 0.6 million homes in excess of the national baseline.
This finding underscores a stark reality: if these 11 states had maintained housing supply levels similar to the rest of the country, the national housing shortage would have been nearly one-third lower.
A powerful map accompanying the analysis drives this point home. Counties across the nation are color-coded by the severity of their housing shortage as a percentage of their existing housing stock. Counties in dark red indicate areas where the shortage exceeds 15 percent of the current housing supply—hot spots for housing scarcity. Unsurprisingly, many of these dark red counties cluster in California and the West.
The data reveal that while housing shortages exist nationwide, they reach crisis levels in coastal California and parts of the Mountain West, where restrictive zoning, burdensome permitting processes, and resistance to new development have all stymied supply.
It wasn’t always this way. In the 1970s, California had normal home prices—about on par with the rest of the nation. But since then, a toxic mix of ever-tightening environmental regulations, arcane zoning laws, and relentless NIMBY (Not in My Backyard) opposition to new housing has created an environment where it’s virtually impossible for the market to build where new housing is most needed. The result is astronomical home prices that make even well-paid professionals struggle to buy or rent.
California’s failure to build hasn’t stayed within its borders. The state has been exporting its housing crisis across the West. Over the past 30 years, IRS data show California has suffered a net loss of more than three million taxpayers and their dependents to the blast zone states. Small states like Nevada and Idaho, along with Oregon and Arizona, have been especially affected—absorbing massive inflows of Californians that amount to 15 percent (in the case of Oregon and Arizona) to a staggering 37 percent (in the case of Nevada) of their total populations. These migrations have driven up home prices and rents in receiving states, spreading California’s affordability problems far beyond its own making.
For policymakers and housing advocates, the takeaway is clear: Fixing America’s housing crisis demands boosting supply in the places with the most severe shortages. This can happen by unleashing the private sector through what we call the Housing Abundance Success Sequence: allowing smaller lot sizes in new subdivisions, enabling single-family-to-townhome conversions in expensive neighborhoods, and adding mixed-use zoning in underutilized commercial corridors—done by right, and kept short simple without micromanaging. By our estimates, these steps could close the West’s housing shortage within a decade.
Only by clearing these obstacles can America finally build enough homes to restore affordability, opportunity, and the promise of homeownership for all.
Map Shortage as a Percent of the Housing Stock: County-level
Link to the Tableau and Methodology: https://heat.aeihousingcenter.org/toolkit/housing_shortage
Table: State-to-State Migration Netflow: 1990-2021
Link to the Data: https://heat.aeihousingcenter.org/toolkit/migration_tableau
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