The laws of supply and demand dictate that when housing demand outpaces supply, prices go up. In theory, supply increases in response to that demand, and prices stop their climb. The housing market has not followed this pattern in many jurisdictions in the United States: rents and housing prices have risen and vacancies have fallen, but the housing supply has not yet rebounded. With limited housing supply and anemic income growth, millions of households now struggle to afford to house. A growing number of households, including moderate-income households, are cost-burdened, spending more than 30 percent of their income on housing, with the burden greater among renters. In the 10 highest-cost metropolitan areas, 41 percent of households were cost-burdened in 2013, compared with 34 percent of households nationwide (JCHS 2015).

These high-cost jurisdictions, which include San Francisco, Boston, New York, and Washington, DC, are of particular interest to understanding market dynamics and can be testing grounds for methods that increase housing supply to better serve unmet demand. This brief discusses the recent literature on the implications of insufficient housing supply in high-productivity jurisdictions, then it uses the Washington, DC, region to explore barriers and opportunities to increase housing supply.