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
Well, in the United States, there actually isn’t a housing shortage. There are [15.1 million vacant homes](https://usafacts.org/articles/how-many-vacant-homes-are-there-in-the-us/) in the United States, and [less than a million](https://en.wikipedia.org/wiki/Homelessness_in_the_United_States) homeless people on any given night.
However, there is a huge mismatch in the housing market between the types of homes that people want to buy, and the number actually available. Most of the homes available are not actually houses, they are rental units. The lack of desirable homes creates competition, raising prices; that’s the inflation everybody keeps talking about.
Ordinarily, raised prices are supposed to be matched by increased wages. If wages had increased, home construction would have been more profitable, and more of them would have been built. However, nobody actually forces companies to raise wages in a way that matches inflation, so they haven’t.
The resulting decades of wage neglect by US companies removed the economic incentive to build more houses for people to buy, and this is why the US didn’t build enough houses.
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