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
1. Birth rate is still positive, and population is still increasing. Old people are still dying at a lower rate than new people coming into the housing market right now. It’s about a 20 year lag between people being born and people needing housing, and birth rate 20 years ago was higher then.
2. Immigration into the US is consistently strong, also contributing to population growth.
3. Landlord corporations and Equity Funds are buying massive amounts of housing and renting them out, and turnover leads to a lower efficiency of housing occupation (if people move in/out every 2 years, and it takes 1 month to clean and find a new tenant, that’s where the home is only occupied 96% of the time. Put in other words, if there are 100 million homes, 4 million of them are unoccupied at any time due to the cyclic of tenants).
4. In order to maintain a steady supply/demand curve, supply needs to be created at a 1:1 ratio of demand. This has not been done since 2008, so for 16 years we have had a large increase in demand without the accompanying increase in supply. This has been especially true in California. One example: Between 2011 and 2019, the city of Cupertino added just 17 new housing units, while Apple (headquartered in Cupertino) added nearly 11,000 jobs there.
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