Kentucky’s housing needs detailed by the business and home-building community

Kentucky Chamber and Home Builders Association of Kentucky testified before the legislative Housing Task Force Monday to share key housing challenges Kentucky faces, findings from a recent report on the economic impact of housing, and solutions that would help ensure the Commonwealth is primed for growth.

Kentucky Chamber Senior Vice President of Public Affairs Kate Shanks and Home Builders Association of Kentucky CEO Anetha Sanford spoke on a recent report, “Building a Foundation for Growth: Meeting Kentucky’s Current and Future Housing Needs,” released in July. Sanford said the group wanted to educate the public and community leaders about housing and the current environment.

The report frames the current housing landscape across the Commonwealth, combining research and feedback from local leaders across Kentucky and highlighting the urgent need for action to address the state’s housing shortage and affordability challenges.

As the Commonwealth is seeing major economic announcements, Shanks asked, “How do we help communities make plans for growth?”

Before publishing the report, the Kentucky Chamber Center for Policy and Research conducted a statewide listening tour to hear from local community leaders in different areas of the Commonwealth.

Data collected from these sessions shows 90% of community leaders are concerned that if an economic investment with 1,000 new jobs were announced tomorrow, their community would not be positioned to meet the growing demand for housing.

Additionally, 93% of community leaders said that if a family of four were to move to their community, they would find it difficult to find housing that fits their needs.  

The report shows that Kentucky faces significant housing challenges, including an aging housing stock, a growing gap between home prices and household incomes, and statewide housing shortages, which are estimated to be as high as 206,000 housing units.

Shanks said a way to determine the reduction in home-building activity is to look at the number of housing permits issued per year. The report found that home-building activity decreased drastically after the Great Recession began in 2007, and if Kentucky had issued permits at the same rate from 2008 to 2023, there would have been an additional 125,362 permits. 

A key challenge that has slowed the housing industry’s growth is the shortage of skilled labor, which causes higher costs, construction delays, and reduced productivity.

Based on the listening sessions, Shanks shared that 77% of community leaders believe there is not an available workforce to address housing challenges in their area.

Sanford detailed specific programs working to fill this skilled labor gap and said the legislature allowing proprietary schools to be used for Kentucky Educational Excellence Scholarships has led to progress. This legislation was a priority for the Chamber for several years and became law in 2023.

Another key challenge for the housing industry is planning and zoning, which can contribute to significant delays and cost increases.

During the testimony, Robert Thieneman of Louisville Realty Group spoke about the challenges developers face, pointing out the many facets of the development process that can cause obstacles, from traffic and environmental studies to zoning issues.

He emphasized the need for more certainty and flexibility in the development process to ensure the industry can develop properties best suited to community needs.

Thieneman said a collaborative effort is needed to develop housing in a more efficient and affordable manner, as the prices of labor, land, and other factors are not going down.

Sanford commended the legislature for passing House Bill 443 during the 2024 session to help streamline development by requiring that local laws relating to subdivision plats and development have objective standards.

The report suggests several other solutions that will help position Kentucky for growth:

• Explore and encourage local land-use and zoning reforms
• Consider how government regulations impact housing and implement reforms
• Leverage tax incentives and taxpayer-funded support for low and middle-income housing
• Support regional approaches to solving housing challenges
• Help communities understand their housing needs and challenges
• Continue to invest in infrastructure and support local communities, developers, and home builders with infrastructure costs
• Support and grow the home-building workforce

Shanks commended the legislature for prioritizing growth in many areas of Kentucky’s economy. “This issue is not only about growth, it is about quality of life,” she said.