Homes have been getting more affordable since the 70's

When the shortage bros accidentally demonstrate that zoning is a trivial part of the story

Random Walk will make it two antagonistic posts in a row. Enjoy 🙃.

• housing shortage steelman

• payment-to-income ratios skyrocketing totally stagnant, if not lower

• debunking the shortage myth, over and over and over

• ‘the land-use did it!’ (nope)

• it takes more work-hours at prevailing wages to buy a home! (nope)

• the totally obvious, staring-you-right-in-the-face, non-shortage hypothesis

---

👉👉👉Reminder to sign up for the Weekly Recap only, if daily emails is too much. Find me on twitter, for more fun. 

---

Homes have been getting more affordable since the 70’s

Every day the steady drumbeat of “Housing Shortage Affordability Crisis” marches on, and every day Random Walk says, “lol, wut?”

Shortage steelman

The shortage argument is a bit of a moving target, but the gist of it is that:

• regulators are bad—which is generally true—and they are artificially depressing the supply of housing.

• They do this (mostly? entirely?) at the local level with zoning restrictions that prevent builders from building whatever the market will bear.¹

• As a result of those supply constraints, home prices rise beyond-the-reach of too many people.

This shortage-affordability dynamic is now a “crisis,” although it’s a bit unclear when it became a crisis (or what would make it an un-crisis), and whether it’s a crisis everywhere, or just where houses are expensive.

The solution is to eliminate regulation transfer regulatory authority to the ‘good’ guys, so that we can ‘build more housing.’ If only we built more housing, then everything would be better.

Shortage proponents can correct me if I’m wrong, but none of this is an exaggeration or misrepresentation, so far as I’m aware.

A common bit of evidence that Shortage Bros tend to proffer is a comparison of home values to inflation:

Business Insider

Home values have appreciated substantially more than inflation, at least since the 70’s.

So you see, obviously the price of homes have gotten out-of-control.

It cannot be explained by rising wages, it cannot be explained by bigger, more expensive homes, it cannot be explained by higher input costs, and it cannot be explained by unevenly dispersed demand.

Well, it can in part, but even when controlling for those things, housing is still more expensive than it “ought” to be (at least where people want to live), and therefore we conclude definitively that there’s a shortage, and it’s a crisis, and something must be done.

And this is a theory that people feel *very* strongly about.

Debunking the sHoRTaGe myth

Random Walk has spilled inordinate amounts of ink debunking this myth, or at the very least, debunking the notion that it’s somehow axiomatically true.

Without rehashing it all here, the gist of it is:

• demand is not, in fact, growing—the stork is not on our side;²

• whatever shortage we may have had, it’s gotten substantially better over the past few years (due to historic levels of building), so whatever is causing the “affordability crisis,” right now (as opposed to the non-crisis from 2008-2020), can’t be shortages.³

• home values are not, at the moment, appreciating (for the most part). Homes aren’t selling at all (and it has nothing to do with ‘lock-in’), and the ones that do sell, are going for smaller and cheaper.

• rents also have not “skyrocketed” (and in some places, for some inventory, rents are cheaper than they were in 2019, including NYC!);⁴

• in general, price signals, builder behavior, and supply-levels (which are high) are all responsive to many things—interest rates, especially—the least of which appears to be changes in local zoning regs.

I mean, if there was a big shortage, then riddle me this: