I’m new to this sub. Why is there a housing shortage when the birth rate has been declining considerably? The national news just said we need 5 million more homes to satisfy the current need. I’m genuinely curious. Thanks!
In: Economics
With normal products, if there is a shortage, that will lead to increased production of whatever there is a shortage of. For example, once the COVID pandemic started, there was a shortage of masks, but manufacturers quickly ramped up production.
With housing, it is far more difficult to increase production. Someone trying to build new housing has to spend a lot of time searching for available land to build on, designing the new housing, and then dealing with a government red tape to get approval for the project (the extent of this can vary a lot by location). And that is all before any construction has started. This process can potentially take years, and if developers don’t think that they are going to get a good profit at the end, they aren’t going to bother going through all of that. This has also contributed to why so much of the new housing built is expensive “luxury” housing.
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