The new U.S. housing crisis is about more than a lack of new construction
While many people still think that the last housing crisis in the United States was largely due to banks offering too many subprime mortgages, it’s now clear that wasn’t actually the case. Instead, recent research pins the blame on house flippers and speculators, who pumped markets up, then defaulted in large numbers when they were unable to turn a profit on their investment properties.
Now, however, a different set of circumstances entirely looks poised cause a different type of housing crisis.
Since the real estate market crash took the wind out of the construction boom of the 2000s, fewer homes are being built per U.S. household than at nearly any time in history, according to the Federal Reserve Bank of Kansas City. That’s partly due to builders being nervous about returning to previous levels of construction, fearful that another crash could come. It’s also due in part to the fact that some construction companies shifted from building low and mid-priced housing to higher-end, higher-margin homes.
The resulting lack of new supply is widely blamed for the current shortage of houses on the market. In reality, while that’s a piece of the puzzle, it’s not the only factor. The other fundamental issue is that homeowners simply aren’t selling.