> Still, she added, rents are about 20% higher than pre-pandemic levels, and consumers remain concerned about their financial situation and job security in recent surveys.
When people throw around the word shortage what they mean is "availability at a price I'm willing to pay." Same with labor shortages.
> When people throw around the word shortage what they mean is "availability at a price I'm willing to pay." Same with labor shortages.
Yeah that's actually an incomplete and oversimplified statement. Some people think, "If you want something, just pay more". But that ignores short and long-run supply limits, price frictions, skill matching, and more. The correct Econ 101 version reads:
"A shortage exists when, at the going price, the quantity people want to buy is greater than the quantity suppliers are willing or able to provide—labor markets included."
You cannot expect imperfect markets (i.e. real world markets) to clear simply by raising or lowering prices. Real-world constraints exist.
A simple example is this: Chicago has plenty of cheap, vacant units in higher-crime pockets of the South Side, but few buyers will take them. Meanwhile, exurbs with good schools and low crime have limited inventory because zoning caps and NIMBY politics choke new construction. That mismatch -- ample supply where demand is weak and capped supply where demand is strong -- creates a local housing shortage even though the citywide vacancy rate looks high. Price alone can't clear the market because the constraint is about where units are, not how many exist.
So that is a good point. Demand is related to price. Lower the price, demand increases. Perhaps we've reached the point where all those who want and can afford apartments priced $x and above already have apartments, but there are not apartments priced $x-$z available.
So we will just have to see if prices continue to drop.
I think most would imagine it meant low inventory over fixed prices. If you have millions of overpriced widgets, it's not intuitive to call that a widget shortage.
Much of the narrative has been that the problem is because nimby boomers won’t allow apartment complexes in single family neighborhoods, there are simply not enough apartments.
This is oversimplified as an attack on the image of an enemy. Most people work hard as hell to call a place home, and understandably don't want their community "ruined", the definition of which they have variably (un)reasonable metrics for. That's the complicated truth. Yes, people also don't want things to change in general from the moment they called it home, but change isn't the same thing as "ruined".
No, the problem is that humans breed to fill the supply of housing, causing prices to go up again. The population of the U.S. has doubled since 1960. It’s a never ending cycle, only after every iteration, there is more pollution, less beauty, more greenhouse gasses in the atmosphere, more traffic, etc. It’s not sustainable. The solution is not to build, it is to reproduce sustainably and stop overrunning the planet with unchecked population growth. That implies limits on how much you can ruin a neighborhood with development.
The title is about asking rents, not average rents. In a perfectly liquid market these are the same, but shelter is far from liquid. Many renters have been renting for years and are paying less than today's asking prices; if they had to move, they'd still be facing a rent hike. This means that while the pressure on housing may be decreasing somewhat, shelter inflation is still a big thing (growing at a 3.6% annualized rate as of April, and outpacing broader inflation significantly).
1 - The median apartment this year may be different than the median apartment 3 years ago. Perhaps cheaper (or smaller) apartments and houses are coming up for rent. A more accurate measure would be comparing the prior rents to new rents for existing places.
2 - Median doesn't equal mean. The 50th percentile apartment may be cheaper, while the 25th (more applicable for housing affordability discussion) or 75th (more applicable to HN readers) may be higher.
3 - The median is still up 20% over pre-pandemic levels.
4 - To measure housing shortage we should check levels of homelessness based on economic reasons. (Much more complicated than median price)
This is a fantastic question, and sparked a lot of thought.
The story shows 28/44 metro areas had decreasing rents last year, so 64%. That still means that the other 16 had rising rents.
My guess is that rents lag inflation quite a bit, so the (slight) decrease is basically reflecting the drop in inflation over the past couple years. So, yes rents dropped 1% last year but they’re up 20% over 5 years.
I do believe that the US has a significant shortage of housing that is high quality in city centers. Families don’t want to live in apartments in this country so they end up living 20+ miles from their work and spending a huge amount on transportation.
If that were ever true, people would chose to spend a higher percentage to get a nicer, bigger, or better located place.
Unlike many goods, there is practically no upper bound on what you can spend on housing. You can't buy a better phone for $3000, but you can continue to buy a better home up to $50 million (possibly more).
If there wasn't anyone renting at the high prices, then they would sit empty, but someone must be renting them. Otherwise the price would have to come down or they stay empty.
Has rent ever been 10% of take-home pay of a lower-class laborer anywhere in history? Asking because this goal doesn't seem very achievable, but I could be wrong
By 1933 [Social Democrats in Vienna] had built almost 60,000 dwellings, mostly in huge apartment houses... These were built so efficiently that the average cost per apartment was only about $1,650 each; since rent was expected to cover only upkeep and not construction cost (which came from taxes), the average rent was less than $2.00 a month. Thus the poor of Vienna spend only a fraction of their income for rent, less than 3 percent, compared to 25 percent in Berlin and about 20 percent in Vienna before the war.
Aka actual rent because subsidy can make rent for some group targetted for special treatment whatever the subsidizer wants. Subsidized rent is a stupid metric. What matters is the broad situation for everybody
I doubt it. If we go by the guideline that your housing costs shouldn't exceed 30% of your salary (which I usually understood to be pre-tax), converting that to post-tax for a relatively low-income job is not going to bring that down to 10%.
Sure, that's just a guideline, but it's presumably based on what is (or once was) reasonable and possible to expect.
Ah yea, it looks like that's true. I didn't calculate the actual percentages, but it was very low. Thanks for the heads up -
> Demand for housing also remains heavy because Soviet rents, heavily subsidized by the Government, are very low. A modest two‐room apartment will en for 6 to 8 rubles ($8 to $11.30) a month, including some utilities. A four‐room apartment wil rent for 14 to 16 rubles ($18.20 to $22.30). Apartments in more modern buildings cost more because of additional services.
I think if you are looking for slaves, you should look at American history. What products of your labor do you keep in this country if you are not a business owner?
I am not a fan of all the choices the USSR made, but you are mischaracterizing a society under siege by the capitalist west.
There's a housing shortage in places like California where people aren't allowed to build. There's no housing shortage in places like Austin, Texas where people are allowed to build.
"Just because home prices are coming down and there are more listings, doesn't mean that prices are affordable. So there's still a supply problem in cities like Austin," Turner said. "I think only 25 percent of Austinites can afford to purchase a home at the median home price."
The trouble is that Austin will just become California once those people buy homes, because that's how housing works in the US. It's an investment, and not just any investment, but the primary investment for the middle class. We don't actually want housing prices to come down.
My opinion is there is not really a housing shortage, instead, there is a shortage of housing where people want to live. Take any populous city and you will find the cute, walk-able neighborhoods that everyone wants to live in. Because of that, they have higher rental prices.
There is plenty of housing, but in a capitalist market of supply versus demand, the loudest group are going to be those who want to live in the expensive housing but can't afford it.
