Here’s a story about banks and municipalities teaming up to destroy excess housing stock. Some will see this primarily as a story about overbuilding and adjustments. I see it as a catastrophic illustration of how massively our policies have failed.
Here’s a chart showing the decades long trend in population growth and housing stock growth:
Here’s the ratio of new houses per new people:
These aren’t perfect comparisons because “new people” is a net measure and new housing starts is a gross measure. But I think it illustrates the basic point well. There is, indeed, a boom-bust cycle in housing construction and there was, indeed, a boom in the mid-2000s. But the scale of the boom wasn’t particularly unusual while the scale of the bust has been. At this point in the cycle, the construction industry should be recovering. But it’s not recovering because people are too poor to afford new homes. The low incomes created by high unemployment and low hours worked among the employed is spurring us to actually destroy housing units, doubling-down on the impoverishing effects of not stabilizing the macroeconomy.