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
because in a capitalist economy housing isn’t built to house people, it’s built as a means to make money, and those two priorities don’t necessarily align. So you end up with a bunch of overpriced condo towers that sit empty or get bought as investment properties while people sleep in tents along the tracks.
There isn’t a housing shortage.
There is an economic crisis in big cities where lower income residents can barley afford rent.
One of the big problems is foreign investors and corporations are buying a ton of houses and squeezing the prices for the renters or leaving them unoccupied.
The big reason is zoning rules which residents of wealthy neighborhoods use to keep low income people from living nearby.
The smaller reason is because construction, like many other industries, has economies of scale, which means it costs less per foot to build a mansion than a smaller home.
If you take the plans for a small home, double the width and length, you will have four times the square footage, but only twice as many feet of wall, the same number of doors, etc..
Used to be they’d build a modest 2br, 900sqft ranch and sit it on a tiny little plot, so close you and your neighbors could shake hands through an open window.
But there’s more money building 2000sqft McMansions. So that’s what they build.
And once you’ve bought your McMansion, the last thing you want is a low income complex built within a mile of you. So you join boards and committees, what have you and vote to keep those things far away from you.
Creating shortages is a basic function of capitalism. They are highly lucrative.
In this case, the use of houses as investment vehicles leads to empty homes and rent-seeking. And bums. Hordes and hordes of them.
(1) Housing stock can fall into disrepair reducing the available number of houses. Low level of new builds may only replace this rather than provide the needed increase in homes.
(2) Aging population. Life expectancy has increased over the last 30-40 years. That means older people are using their houses for longer so they aren’t becoming available for younger people aging in to buying their first property.
(3) changing social norms. People used to live at home until they were married, then a couple would move in to their first home together. Now people leave home earlier and frequently live alone either (and esp both combined) pushes up demand on the number of properties required. Equally family break ups means that that same married couple now often need 2 houses instead of one (at least until one or both parents enter into another co-domicile arrangement). Also multi-generational living is less common. Older relatives are less likely to move in with their kids now than once upon a time too.
(4) inefficient use of housing stock. A lot of those older houses that were used for multi generational family living, or even sometimes multiple families, are now single family dwelling rather than being split up into multiple flats for instance.
(5) immigration. Even though the birth rate is down the population is up. Lower death rates is only part of this, and net inward migration is the other part.
I don’t think there is a housing shortage. There are pleanty of housing, but they are in places where people don’t want to live, and there are areas where houses are too expensive for the people who is trying to live there.
People being homeless is not a matter of housing shortage, but rather that the people are not able to pay for the housing that is available. There can be 10 one million dollar houses in a street that are up for sale, but that doesn’t help any of the people on minimum wage. The profits that a constrction company can make from luxury housing is so much higher than building low income housing, so the houses we have tend to be build for the people with money.
Going out of the very popular high cost areas, there are pleanty of housing that is up for grabs for very reasonable prices. However there are not a lot of jobs there, so the people who need a home don’t want to move there.
So there is not really a shortage, but they there in the wrong places for the people who needs a home.
The actual explain like I’m five answer is that housing is treated as an investment. Many People buy it to earn more money, and because of that they want the price to increase as much as possible. There is no situation where these people will want the price of housing to go down or even stay the same. Ever.
The Second half of the situation is that there’s a limited amount of land in the world, and that makes it a precious resource whose price will only increase over time.
It’s not one house to one person. There are people who own multiple properties and this is taking away from the rest of us. Let’s say you have a pizza for sale with 8 slices and there are 4 customers in line. In a fair setup you would have 2 slices each but in reality first customer orders 4 slices, the second orders 2 slices and the third orders the last 2 slices. What’s left for the fourth customer then? That’s a huge part of the housing shortage.
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