Allison Shertzer takes issue with the headline’s cryptic economic message. If there is enough housing, then the price for occupancy should settle to the price each resident can afford. If there are fifty homes in a settlement and fifty households, then those who can pay the most pick first, and down the line, the pricing match shuffles until the last match of the least desirable to the household to those with the least resources. This simplified balance market omits nuances like how two homes are tied up when people transition from one property to another. Or that when major renovations are underway, it is difficult to live on the property, so it is vacant.
The basic premise, however, is that when there are sufficient structures to shelter every household, the price to live in those structures is pushed through the system to reflect consumers’ ability to pay. After all, even at the lowest end of the scale, it would be better for the property owner to receive some income from a less advantaged person than to let the property sit vacant.
Or is it?
It is refreshing to see a study confirming that dwellings are, in the big picture, available in
sufficient numbers. “The numbers showed that from 2010 to 2020, household
formation did exceed the number of homes available. However, there was a large
surplus of housing produced in the previous decade. In fact, from 2000 to 2020,
housing production exceeded the growth of households by 3.3 million units. The
surplus from 2000 to 2010 more than offset the shortages from 2010 to
2020.”
This article tries more than most to zero in on what is concerning. It’s not affordability in general. When ten parties are bidding on a house, that tells us there are plenty of households who find the price within their range of acceptability. When houses are selling, and apartments are rented, then folks have the funds to make those arrangements work.
What is of concern, and has always been of concern, is sheltering those at the very lowest of means. This brings us back to the question: If there are open units to occupy, is there a reason why they would be left vacant instead of settling for some cash flow? Yes, there is a reason. In some cases, the net monthly cash flow is negative. The issue is being talked about as if it concerns the building, but it’s really about the necessity of support services.
It would be even more refreshing if the conversation went in that direction instead of
hammering away about building affordable housing, which is another cryptic
economic fallacy.
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