Ive heard repeatedly when trying to learn about our housing situation that we don’t have enough homes. I don’t understand how that’s the case or if it’s even true. Who or what is stopping more homes from being built exactly? If the demand is so high and the supply is so low then the suppliers would obviously ramp up production, right?
In: Economics
(a) In part it’s because we’re playing catch-up. During COVID, not many new homes were built (for a lot of COVID-related) reasons, and some contractors and tradespeople got out of their businesses. COVID’s over, but it takes time to catch up to where we would have been.
(b) In part it’s because of interest rates. In the 2010s, it was possible to get a 30-year mortgage for, say, 2.5%. Mortgage rates are now ~7.5%. That’s a huge disincentive to move. So, a lot of homeowners are hanging onto homes that they otherwise would have sold.
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