Supply Issue a Major Hurdle in KY Housing

Legislators from the House and Senate convened the first meeting of the Kentucky Housing Task Force on Monday to understand the issues surrounding housing insecurity in the state.

Wendy Smith, the deputy executive director of the Kentucky Housing Corporation (KHC), a quasi-governmental agency housed inside the Finance Cabinet, told the legislators studying the issue they must focus on the supply side of the equation.

“There is [housing] need in every area of Kentucky,” Smith told the committee. “Housing is Kentucky’s most urgent issue.”

She told the committee that, according to phase one of KHC’s report, ‘Kentucky Housing Supply Gap Analysis,’ there is a need for 206,207 homes across economic divisions in the state. She said 101,000 rental homes and 104,638 single-family homes are needed. Phase 2 of the gap report is coming on August 21 at the Kentucky Affordable Housing Conference.

The housing shortage is spread across every income level for home ownership and across geographic regions of the state – including urban and rural Kentucky, according to KHC.

“I encourage the committee to see it as a supply issue,” Smith said, offering an analogy of musical chairs with a person on crutches not getting a chair. “Is it the crutches, or are there not enough chairs?”

Moderate-income homebuyers can’t find affordable housing because there is a lack of housing in the $150,000 to $200,000 range. Multiple factors are at play for Kentucky’s lack of available housing, including the natural disasters that demolished thousands of homes across the state.  

Property owners are also facing escalating insurance costs because of natural disasters.

Economic growth is also squeezing the supply of homes. Local resistance also plays a role – with land use zoning restrictions in some localities, but not all.

There was also a loss of builder capacity following the 2008 Great Recession. Small builders had more issues getting access to lending, credit, and land. The construction workforce has also not rebounded from the 2008 recession.

According to KHC, there’s also a lack of supply for the “middle housing” portion of the equation, which would include duplexes and townhouses, largely due to restrictions for mixed-use neighborhoods in some locales. There is also a decrease in the number of new homes that are less than 1,400 square feet.

The builders face regulations and issues that slow the delivery of units to the market. “Kentucky needs build-ready sites,” Smith told the task force, as well as advanced construction techniques that do not only rely on stick-built homes.

Calling the housing issue an economic development issue in disguise, Smith said, “Homes are where jobs go to sleep at night.”

The task force also heard from Dr. Matt Berry and Dr. Beth Kelly of KY STATS, which is housed in state government under the Education and Labor Cabinet. They shared tools that have already been created that lawmakers can use as they seek answers to housing questions.

KY STATS shared multiple tools, including the legislative district dashboard, that show specific trends from Kentucky and US Census data. The Kentucky Commuting Patterns Report, utilizing package data from the census bureau that, looks at jobs Kentuckians commute for and where the residents are coming from and going to work. Finally, KY STATS shared their Occupational Outlook tool, which solely looks at estimated summaries for state and local workforce areas by occupation, not individuals. It also includes occupational outlook by education, the top five openings by educational attainment, and other ways to dissect the data for policymakers.

The task force will study and review current access to housing and its availability. This will include a comprehensive look at housing costs, population needs, and housing as it relates to employment. The task force will also consider how state and local laws, regulations, ordinances, and policies impact housing and how other states are approaching similar challenges.

The Kentucky League of Cities Board of Directors has voted to engage on the important topic of housing and be prepared to be a primary participant in conversations regarding the housing shortage. KLC supports housing policies that ensure land use laws and planning and zoning regulations are made at the local level so that they are based on both local goals and values. KLC opposes any effort to preempt or mandate outcomes in local land use decisions and supports local policies that create additional housing options that reflect local values and goals and will leverage state programs and funding to move forward more quickly.

Rep. Susan Witten and Sen. Robby Mills co-chair the task force. The next meeting is Monday, July 29, at 1:00 p.m.