Probably the least-understood economic issue in America today is that notwithstanding high vacancy rates in some portions of the country, we’re now objectively undersupplied with housing relative to the size of our population. Since pre-recession America had the biggest houses in the known universe, we’re finding it perfectly possible to physically accommodate all these extra people by having twentysomethings live with their parents, siblings doubling up, etc. But what’s basically happened is that joblessness, high debts, and lack of income have caused net household creation to crater even as the population keeps growing. Joe Weisenthal’s chart of the day makes this point very effectively, but those interested in more details may want to check out my article in the December issue of Architect magazine which is basically devoted to trying to get architects to recognize that the horrific slump their profession is enduring is the result of a cataclysmic policy error and not the inevitable hangover from a boom.
Meanwhile, though it’s not as wonky as Weisenthal’s FRED chart I’m rather taken with this graphic the magazine made to accompany the piece illustrating what some really good and really bad years for housing starts looked like in the United States:
Now you can see that we really were doing a lot of building at the beak of the aughts. But the boom was really only marginally boomier than peaks in ‘77 or ‘84 and actually smaller than the ‘72 peak. And of course by 2006 the overall population was much larger than it had been in the seventies or eighties. What’s reallly unprecedented has been the depth and duration of the slump. Simply returning to the bust conditions of 1991 would be a big step forward.