What Is a Housing Shortage, Anyway?

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There’s No “Shortage” in Plain English…and That Fact Doesn’t Really Matter

The most obvious, plain-English interpretation of “there’s a housing shortage” is a numerical shortage: “There are literally not enough homes for everyone.” This is flatly not true in the vast majority of communities. Yet you’ll see people misleadingly use this definition of “shortage” to argue that building homes should not be a priority.

Take the factoid/meme that there are far more vacant homes in America (or Your City’s Name Here) than there are homeless people. By now, that meme has circulated through my social media feeds, and probably yours, at least a dozen times. It’s a classic case of Shouting From Mount Stupid. The claim falls into the category of technically true falsehoods: There are more vacant homes than homeless people, but that doesn’t mean what it’s usually implied to mean, which is that we don’t need to build anything, we just need to get people into the homes that exist.

There’s not really any good way to do that. The unstated assumption of the “vacant homes” factoid as it’s usually deployed is that it reflects homes that could easily be inhabited but are simply being held empty by their owners on a whim or for convenience. A lot has been written about the reasons that is overwhelmingly false, and I’m not going to turn this piece into a rant on the “vacancy truther” debate. Suffice it to say that many homes that show up in statistics as “vacant” aren’t meaningfully “vacant and available for someone to live in.” They may be newly built, in between tenants or owners, undergoing renovation, used seasonally, or some other qualifier, or they’re in either a location or condition where the demand doesn’t exist to fill them. No one has found a policy—a vacancy tax or other incentive—that will cause more than a small fraction of these homes to become inhabited.

The deeper truth is that “just enough homes for every person” is a terrible policy goal, anyway. Every market needs some slack in it to function effectively. As a general rule, the more slack—the more vacancy—the more and better options buyers and tenants have when looking for housing.

We want people to have choice: to be able to move cross-country, move out of a parent’s house or in with a significant other, get out of a bad relationship, live closer to a new job, or any number of other reasons that an individual might want to switch homes—and to not have a hell of a time finding a place to live when these circumstances arise.

On examination, it should be obvious that we need there to be more homes than households in order for this kind of choice to exist. So a logical question is, how many more?

“Shortage” as a Functional, Not Literal, Description

When I say “housing shortage” (which you don’t have to dig very hard to find in my writing and social media posts) I’m not talking about absolute numbers of homes. What I mean, and what I think most people who use the phrase mean, is we don’t have enough homes to avoid bad things happening.

The “bad things,” of course, are in abundant evidence. Take California, the state with the worst housing crisis: working-class people are leaving the state by the hundreds of thousands. Homelessness has surged. An eviction in San Francisco or L.A. often means having to leave the city altogether. Record numbers of 35-year-olds live with their parents. Service workers commute two hours or more to jobs in places like Silicon Valley. Apartment showings are attended by dozens of prospective tenants, some of whom wave wads of cash at the landlord.

These are human consequences of a housing shortage, and by this use of the phrase, they are themselves the evidence that there is a shortage. People are struggling to find housing. They’re being squeezed. How much construction—and where, and of what form—would stop the squeeze? That’s the whole question, and the answer is elusive, not definitive and knowable.

How Many Homes Do We “Need”?

If you like graphs and charts, go read Brian Potter’s whole post on whether there is a housing shortage or not. It’s fascinating. If you’re more of a normal person who’s not into graphs and charts, here’s the takeaway from Potter: we don’t know how many homes we “should” be building, and most of the metrics we might logically use to project that answer don’t actually seem to tell us very much.

Potter starts with an apparent contradiction between two facts, raised by a recent debate spurred by journalist Kevin Drum. These facts are:

  1. Housing starts fell off a cliff in the U.S. after the 2008 crash, and haven’t recovered yet. We’re building less than we historically did for decades on end.

  2. Despite this, the number of homes in the U.S. has kept pace with household growth and actually outpaced population growth.

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