Tight urban supply is a bigger long-term problem than slow sales.
It’s different this time. Photographer: Justin Sullivan/Getty Images North America
Not always a good sign.Photographer: Dave Einsel/Getty Images North America
Good News and Bad News on Housing
A decade after America’s housing market wrecked finance, it’s in trouble again. The good news is it won’t poison all the world’s economies at once this time. The bad news is its structural problems are slowly poisoning the U.S. economy.
Home sales have been wobbly lately, thanks mainly to higher mortgage rates. And the new law limiting SALT deductions – part of last year’s tax-cut bill – is particularly hurting sales in the Northeast. But the U.S. economy is much better prepared for this housing slump than in 2007, writes Conor Sen. Lending standards are higher and home supply is much tighter, Conor notes, suggesting this downturn will look more like 1994’s than 2007’s.
But that tight supply is the root of housing’s true threat to the economy. In California, for example, supply is so limited and prices are so out of control that, for example, relatively well-paid Google employees can’t afford housing close to work. This is a threat to the stability of what would be the world’s fifth-largest economy. A pending state bill to free up development around transit hubs could make a big difference, Bloomberg’s editorial board writes.
Along these lines, Minneapolis recently approved a plan to end single-family zoning in the city, making it easier to build multi-family housing. Noah Smith points out single-family zoning is at the root of a whole lot of urban evils, from tight supply that keeps working people from good jobs, to long commutes that contribute to climate change and general human misery. It’s also pretty racist. More people should follow Minneapolis’s lead and end it, Noah writes.