﻿Housing is a basic human need. But a lack of affordable housing to buy or rent is fuelling a
housing crisis here in the States. Research claims that the US needed 3.8 million homes in 2019,
which grew to 5.2 million homes in 2021. Other surveys, like this one
by the National Association of Realtors, claim that we need around 6.8 million homes.
The construction industry is under intense scrutiny and criticism.
We are constantly being told to build faster, cheaper and in larger quantities. Traditional
construction crews can’t keep up with demand, while also battling price swings,
supply chain issues and inflation. We’re being told that we need to frantically build,
build and build more. We’ve turned to 3D concrete printing, modular construction,
temporary shelters and more in the hopes of finding a solution. Desperate families with
limited housing options have turned to tiny homes, ADUs or additional dwelling units,
and in extreme cases, homelessness. Cities like San Francisco have become unrecognizable in under
a decade. During a recent visit to the Bay area, I was shocked to see every street lined with tents,
RVs, cars missing wheels, and makeshift shelters. State Governments are pouring billions into
temporary housing shelters that are doing little to nothing to solve the problem.
It seems like a new article is released daily about the “lack of housing”
and “inventory shortage”. We are so caught up in blaming the construction industry, that we
haven’t paused to ask if there really is a housing crisis or if the entire situation is artificial.
An analysis of real housing and population data reveals a very scary trend towards over supply of
housing. There are so many parallels between today’s landscape and the housing bubble of
2005 and we’re doing nothing to stop it. In this video, we’re going to look at 5 reasons why there
isn’t a housing shortage in the States. First up, declining population growth
Up until the Great Recession of 2008, the US birth rate hovered between 65 and 70 births per 1,000
women. However, after 2008, the birth rate never recovered. As of 2020, the U.S. birth rate was
55.8 births per 1,000 women, a decline of almost 20 percent from 2007. This can be attributed to
lower fertility rates and couples prioritizing career and financial security over children.
At the same time, the number of deaths has spiked considerably. In 2005, the US saw 2.4 million
deaths per year. That number is now around 3.1 million. It is unfortunately expected to increase
as the Baby Boomer generation ages. This graph shows the natural increase
in population, which is births minus deaths. As this continues to decline, so does international
migration. While the US saw over 1 million immigrants move to the country in 2016, the number
has dropped to less than 500,000. This significant drop can be due to strict immigration policies,
processing backlogs and the pandemic According to the US Census Bureau,
all these factors caused the country’s population to grow by fewer than one million people in 2021,
slower than during the Spanish flu pandemic of 1918 and World War 1.
In nearly every article about a housing crisis and inventory shortage, we’re shown this graph
on the number of housing permits issued per year. It tells us that the new construction dropped
drastically after the great recession and never fully recovered. Permits for single-family homes
declined from a peak of 1.7 million in 2005 all the way down to 400k in 2010, a massive
70% drop. Even in 2020, the number of permits issued was only 1 million, far lower than 2005.
However, overlaying this graph with the population growth graph tells a very different story.
The ratio of population growth to new housing permits should be around 1.5, 1.5, meaning
1.5 people added for every 1 permit. In the mid-2000s, right before the last housing crash,
the Population / Permitting Ratio dipped below 1.5. 15 years later, we’re back in the same danger
zone. 0.8 people were added in 2020 for every 1 permit. For the first time in US history, more
units were permitted than the population grew. This means that we’re heading towards oversupply,
NOT a shortage. The second reason is
the number of people per unit When times get tough and there’s a true
housing shortage, people turn to shared housing to help make ends meet. It’s difficult to cut
the cost of food, transportation and healthcare, so cutting the cost of housing by sharing homes
and accepting roommates is the first compromise. If we were truly facing a housing crisis, the
number of people per unit in the States would be extremely high, between 5 and 8 people per house.
This is evident in several African and Asian countries. However, the number of people per
US household is one of the lowest in the entire world. This graph shows that we are at a historic
low of just 2.49 people per household. The third reason is the number of rental units.
According to Redfin, investors purchased a record $64 billion worth of homes in 2021,
the most in at least two decades. That’s an average of 15% of homes sold in many metropolitan
areas. The percentage is much higher in certain cities like Washington, Atlanta, Charlotte,
Miami, Jacksonville and Phoenix where 25% of homes were bought by investors. Neighborhoods where a
majority of residents are minorities have been heavily targeted, according to a Washington Post
analysis of Redfin data. Minorities usually live in areas that are undervalued or lower priced.
This makes them more attractive to investors, driving up prices for residents.
Here in Texas, it's common knowledge that wealthy out-of-towners and investment firms
are buying up any and all available housing at prices above market rate, driving out anyone
who doesn’t have the cash up front. Here’s where things get very suspicious.
Coverage of investors buying rental units is very biased and skewed. This VOX article from
June 2021, claims that Wall Street, private equity firms and institutional investors
are not to blame for pushing prices upwards. Jimmy Deringer, made an excellent YouTube video where he
uncovered a trail of cash and influence. Comcast owns VOX and NBC. The second largest shareholder
of Comcast is Black Rock, who also owns Time Warner, Disney and News Corp. They collectively
control more than 90% of the US media landscape. I know I’m approaching conspiratorial territory
on this subject matter but this incessant biased news coverage on housing shortage
compared to the numbers doesn’t add up. The fourth reason is low interest rates.
Over the last 30 years, low interest rates have driven up home prices. From 2008, up until 2021,
the 30 year fixed rate mortgage was below 6%, a historic low. No money down, ultra-low interest
rates, and easy qualification gave individuals the ability to buy much more home for their money.
It was also cheaper to buy as opposed to rent, which created additional demand.
Bokhari, an author at Redfin Real Estate News, says that “If we were building enough housing
there wouldn’t be as much investing activity in the housing. If we had enough homes to meet
this demand everyone would be able to buy a home.” This makes absolutely no sense.
An increase in the supply of homes isn’t going to fix a housing shortage
if interest rates stay low. Investors will continue to buy up property and second homes
because there is a profit to be made. As we know, the Fed has been hiking up interest rates
to stabilize inflation, which has increased the 30 year fixed rate mortgage to over 5.5%.
This will logically increase the supply in homes, as we have seen in the past.
The fifth and final reason is the mismatch of housing types and locations.
Trendy markets like Miami, Denver, Atlanta and Austin have an out of control demand for housing,
while other places like Detroit still have plenty of vacant houses. The work from home revolution
over the past 2 years has exacerbated the problem. Currently someone with a salary from New York
can move to Denver with the NY salary, buy a house, and save substantial money. Companies
are slowly catching on to this phenomenon and realizing that they can pay remote workers 30-40%
less than local workers. If and when a recession hits, the labor market should normalize and we
will see huge changes in pay structures. Big names in tech like Google, Facebook, Twitter and
Microsoft have indicated that they will adjust employees' pay based on where they live.
Before we move on to the parallels between today’s coverage and that of 2005,
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Now let’s discuss the parallels between today’s housing market and that of 2005.
Back then, we were told that the housing market was short millions of houses,
and that decades of low inventory were to blame, sounds familiar? After the housing bubble burst,
we suddenly had a housing surplus. Shortage of all housing isn’t the issue,
but the lack of affordable housing is. Millions of homes are tied up as investment property.
Others have mortgages that are in forbearance or delinquent. Many cities still have eviction
moratoriums in place from 2 years ago. While the numbers show that there isn’t an
inventory shortage, I am glad to see the construction industry innovate,
automate and try to increase productivity. Construction is highly reliant on manual labor
so it isn’t an attractive field for young people. Skilled workers are aging out and retiring,
leaving a huge gap in the labor market Unfortunately, this insane pressure to build,
build and build more has created fraudulent and deceitful companies that claim to be the solution
to homelessness and lack of affordable housing. They have raised millions of dollars on an idea,
not a viable product. As much as I hope we don’t have a crippling recession,
we need some sort of reset button to weed out all these phony companies.
Let me know what you think about these two flooring types in the comments
below and if you have any experience with them. I’ll link my Patreon page in the description. If
you can support me, I’d really appreciate it. A big thank you to everyone already supporting me.
I’ll link all my sources in the description below and on my website. Don’t forget to hit that like
button, subscribe button and the notification bell too. Thanks for watching. See ya.