With housing being a top issue for impacting economic growth in Kentucky, a legislative task force met during the interim to study and review current and future housing needs. This week, the Kentucky Housing Task Force released its final report that sheds light on the state’s housing crisis and identifies key challenges and recommendations.
The legislature’s report draws data and key insights from a recent study released by the Kentucky Chamber Center for Policy and Research and the Kentucky Home Builders Association of Kentucky, “Building a Foundation for Growth: Meeting Kentucky’s Current and Future Housing Needs.”
The Chamber and Home Builders Association of Kentucky also testified in front of the Housing Task Force to discuss its research and share key findings from local leaders across the Commonwealth, emphasize housing as a critical economic and workforce issue in Kentucky, and provide recommendations for addressing the crisis.
The Chamber’s report identified several factors contributing to the state’s housing shortfall and points to the lingering impact of the 2008 financial crisis, which caused a significant decline in home construction. Contributing factors for Kentucky’s severe housing shortage include rising housing costs that have outpaced income growth, an aging housing supply, and workforce challenges in the construction industry.
The legislature’s report included recommendations from the Chamber’s study, which encourages the legislature to explore reforms to land use and zoning, leverage tax incentives for low and middle-income housing construction, continue investing in infrastructure, and consider the impact of government regulations.
The legislature’s Housing Task Force report highlights the following challenges:
- Severe Housing Shortage: Kentucky currently faces a shortfall of approximately 206,000 housing units, and if current trends continue, this gap could grow to 287,000 units within five years.
- Rising Cost Burdens: A significant portion of Kentuckians are cost-burdened, with more than 30% of their income going toward housing. This issue impacts renter and owner households across rural, suburban, and urban areas.
- Housing Production: Overall housing production in Kentucky remains insufficient to meet growing demand due to many factors. The report highlights a significant shortfall in “middle housing,” which includes townhomes, duplexes, and other more affordable options.
- Economic and Workforce Impact: The housing crisis hinders economic growth and can create issues for businesses looking to attract and retain workers. Local leaders expressed concerns about their communities’ ability to meet housing demands for potential new economic development projects.
- Policy Barriers: Local zoning regulations, lengthy approval processes, and infrastructure challenges are slowing housing development, while regulatory costs account for a substantial portion of new home prices.
Stay tuned to The Bottom Line for more updates on housing as the 2025 legislative session convenes in January.
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