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
>If the demand is so high and the supply is so low then the suppliers would obviously ramp up production, right?
If it was up to the builders and developers, yes, they would. However, building is heavily regulated. New development needs to go through various review processes and obtain approvals from various branches of local government, environmental regulators, etc. For example, you may need approval from a utility board to get water and sewer to a new subdivision, plus environmental permitting for waste water handling, plus zoning and permitting. The number of approvals required and ease of obtaining them will vary greatly depending on where exactly we’re talking about. Some states make the process relatively easy (e.g. Texas) and some make it quite hard (e.g. California), and this accounts for much of the movement of people from the Bay Area to Austin, for example.
A big part of it is also that the shortage is not necessarily for housing generally — we could build huge new developments in the Dakotas, but few people want to live there — it’s for housing in high demand urban areas, which have already been developed and have quite limited open land for building. The only good way to solve that is by replacing single family homes with multi-family, and that generally faces even bigger zoning challenges than simply building on open land. Areas are generally zoned for single family or multi-family buildings, and generally existing residents in single-family zoned neighborhoods *hate* the idea of apartment buildings going in because of concerns about appearance, additional traffic, and concern that apartments will bring in lower income people (and everything that gets coded with that).
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