The Myth of the Housing Shortage

Submitted by Rich Toscano on January 19, 2006 - 9:40am
Each Thursday hence I will be writing a housing column for the Voice of San Diego. This week's article concerns the San Diego housing shortage. Specifically, that there isn't one. It also posits some ideas as to why people continue to believe there is a housing shortage—a "crisis," even—despite the fact that the data clearly proves otherwise.
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Submitted by barnaby33 on January 19, 2006 - 11:38am.

All things considered and otherwise equal, fat people use more soap. Do they believe they use more soap, now thats the question to be answered!

Josh

Submitted by powayseller on January 19, 2006 - 11:49am.

Great article, Rich! I hope you get a chance to get on one of the KPBS shows as well, such as These Days w/ Tom Fudge.

Submitted by tliacono on January 19, 2006 - 7:48pm.

Nice article - I kept waiting for the part about an opium-induced haze, but it never came. It looks like you've gone mainstream ... sold out. The dead give away was when you said "moreover". Do you wear a suit now?

Submitted by sdduuuude on January 22, 2006 - 2:53pm.

Rich, et al.

This is from Dave S - a "regular" pest in Rich's email.

I saw a program on local cable the other night. It showed some San Diego Economists, realtors, politicians, etc. talking about San Diego financial forcasts for 2006. They had charts and EVERYTHING!!! Anyway, one guy was pretty good so I watched for a few minutes.

Then someone in Real Estate started talking. I don't remember his name, but I think it was the same guy from the UT blog article that said you don't understand the psychology of the market. London, maybe?

Anyway, I was very unimpressed. He first said, 2005 proved there really is no bubble, then went on to predict a 5% price decrease in housing this year.

Relating to housing shortages, he pulled out some charts that got my attention. He compared Available housing to the number of jobs. I thought it was a pretty good idea, and it did suggest a housing shortage.

Problem is, the numbers on the axes were hard to read so I couldn't really determine if he had pulled a "Business Week" trick and zoomed way in to show major changes and I don't know if the vertical axis started on "0" or not.

Finally, as we know, Real Estate job growth could sway these numbers to show a shortage. I would love to see the Professor dig into this housing vs. jobs matter to see what the data holds when analyzed properly and presented objectively.

Submitted by sdhfexec on March 14, 2006 - 2:30pm.

Your data seems to be incomplete.

I was looking at SANDAG's Solving the Housing Crisis document published in 2002 and they had a graph of housing production since 1981 (p 11). What would be illustrative is take your graph showing production vs population growth back to 1981. Those that argue the "lack of supply" cause contend that the lack of production in the 1990's created a deficit that has not been made up.

Consequently, while you show demand keeping up with growth for the period 2001 to 2005, Alan Gin at USD said we a "deficit" of 82,000 units in 2000.

So I think a "shortage" remains and, along with the other causes you have mentioned, contributes to the affordability problems we have here.

The problem is that it appears that the current median rent for 2 bedroom apt of about $1200 probably indicates the natural level of affordability that the region can tolerate at current income levels. Given land and constructions costs, it is impossible to build anthing that is affordable to rent or own at that level. So we won't be buidling our way out of the deficit anytime soon.

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