How private equity is changing housing

Did you intend to add something after the definition? For better or worse, "moving out once you reach 18" is widespread enough of an expectation that it can be used as a yardstick for housing shortage.

I think it's interesting how "shortage" is defined across different products.

From an economics standpoint, "shortage" isn't a useful word, unless it's applied in the extremely unlikely scenario where there nothing is available at any price. Generally, this is because price dictates supply.

"Shortage" for the current housing market is generally used to mean, "relative to historic trends, many people want houses who can't afford the current prices."

Shortage in the absence of price controls generally means that something is inhibiting supply from increasing as demand does, causing increased demand to have the primary result of increasing prices rather than increasing production.

Sometimes this is expected or unavoidable, e.g. if you have a sudden increase in the demand for electricity then the price will increase temporarily until new power generation or transmission capacity can be brought online, and in the meantime you have a shortage.

The problem comes when the shortage is a result of artificial scarcity as it is with housing/zoning, because then it's not temporary, it persists until the cause of the artificial scarcity is defeated.

Let's be honest, it's not even that.

It's more like "relative to historic trends, many people want houses [in desirable areas] who can't afford the current prices."

Building tons of new houses outside of the hot areas that all these people want to live would still elicit cries of a shortage and an affordability crisis. Because there are currently affordable places outside of hot areas, but not very many takers.

It's a really tough nut to crack. Because how do you reorient the demand to those areas that have the supply? It's not easy. We can't seem to do it currently, and there's no real plan to do it if even if we could somehow build even more housing. We'd have to build lots of housing only in hot areas. Which sounds easy enough until you realize the economics don't make sense and even on the off chance that you could, it would only generate more demand.

First order of business however should be to find a clever way to stop abuses like the ones outlined in the article. The housing that would free up in the hot areas would not be near enough to meet the demand, but if we stop that nonsense at least we're not "digging the hole deeper" so to speak.

Shortage is almost always used with a hidden assumption that the current price is "bad."

Truckers are currently retiring faster than they're being replaced. So some folks are saying there's going to be a "trucker shortage." In reality, there are plenty of people out there who could get a CDL license and drive a truck, but don't. Why? Because the compensation for being a trucker isn't high enough because the demand isn't high enough.

For housing, from the house seller's point of view, they could have the viewpoint that there are far too many houses for sale, the supply is too high, they want a higher price for their house. And from the buyer's point of view, there aren't enough houses because they want to pay a lower price.

I'm not saying either side is right/wrong or good/bad. It's just that "shortage" isn't a very useful word.

Exactly this. There's something about housing which causes so many people to think its an easy thing to solve by just building more and that's not actually true

You know ... building more where people want to live would really helped.

Building houses in places 3 hours away from closest job wont.

> Because how do you reorient the demand to those areas that have the supply? It's not easy. We can't seem to do it currently, and there's no real plan to do it if even if we could somehow build even more housing.

Uh have you heard of telework? I am sure that both federal and state governments could incentivize companies to offer telework instead of some forced RTO situation.

Or find ways to create jobs in places 3 hours away and distribute the population better like we used to do, in addition to trying to increase build out rates

> For housing, from the house seller's point of view, they could have the viewpoint that there are far too many houses for sale, the supply is too high, they want a higher price for their house. And from the buyer's point of view, there aren't enough houses because they want to pay a lower price.

And who is right is then determined by the market, because "not enough" means "the price is higher than the cost of creating more" at which point the market creates more. Unless the government is suppressing the ordinary market through rules imposing artificial scarcity, which is the evil to be prevented.