Building Kentucky's Future: The Statewide Housing Shortage Sparks a Call for Innovative Solutions

Photo bySpectrum News 1/Sam Knef

Kentucky faces a mounting housing crisis, with demands ranging from affordable units to high-end homes, as state lawmakers and industry leaders convene to confront a growing shortfall. In a legislative task force meeting, stakeholders emphasized the critical role housing plays in economic development, noting that a lack of available homes could stifle job growth and undermine local economies.

According to the Kentucky Chamber of Commerce, the state is experiencing a shortage of approximately 206,000 housing units. This deficit spans all housing categories, with nearly 97% of local leaders acknowledging that their communities lack sufficient housing to meet growing demands. Without enough homes, many businesses reconsider moving operations to the state due to concerns over housing availability for their workforce.

“If companies don’t have housing or can’t hire employees to come and work, that can put a hamper on our local economies," said Anetha Sanford, CEO of the Home Builders Association of Kentucky. Her statement underscores how the state’s housing deficit is directly linked to its potential for economic development.

The barriers to resolving this shortage are multifaceted. A lack of labor, outdated zoning regulations, and inadequate infrastructure have all slowed the pace of construction. Sanford proposed that Kentucky look toward Indiana’s successful Residential Infrastructure Fund as a potential solution. This program provides low-interest loans to communities to reduce the cost of infrastructure projects tied to residential housing development, boosting local economies where job growth is high.

“They set aside $75 million for that, and it went extremely fast," Sanford noted, emphasizing how quickly these funds were allocated due to high demand. Kentucky, she argues, could follow suit to catalyze housing development.

The discussion also focused on "missing middle" housing—such as duplexes, townhomes, and multiplexes—which could help fill the gap in the housing spectrum. According to J.D. Carey, executive director of the Louisville Apartment Association, streamlining the permitting process and reducing minimum lot sizes could significantly accelerate housing construction.

“Lengthy permitting processes add cost, time, and uncertainty to housing construction,” Carey stated, advocating for reforms that could fast-track projects at no cost to local jurisdictions. "Permitting delays can kill projects," he added, pointing to how red tape hampers development.

Another innovative solution discussed was the use of factory-built homes. Logan Hanes from the Kentucky Manufactured Housing Institute highlighted the benefits of manufactured homes, citing their efficiency, lower costs, and minimal waste during construction.

"Manufactured homes last year, the average cost was $127,970," Hanes shared, with single-section homes priced at $86,000 and multi-section homes averaging $159,000. This affordability, combined with strict construction standards set by both the state and the U.S. Department of Housing and Urban Development, positions manufactured homes as a viable option for addressing the state's housing needs.

As Kentucky strives to attract new investments and job opportunities, the housing shortage presents a significant challenge. The Chamber of Commerce reports that nearly 90% of local leaders believe their communities are not equipped to handle an influx of new residents if a major employer brings jobs to their area. For Kentucky to grow and thrive, lawmakers and developers must unite around innovative solutions that challenge the status quo, streamline regulations, and inspire the development of diverse housing options to meet the demands of its workforce.