Claims of a relentless housing crisis are prevalent in policy circles, politics, and the media. But as we have described in several blog posts and a working paper, there are good reasons to be critical of that view. Proponents of this theory often uncritically cite estimates of the housing shortage ranging from one million to twenty million, and that range itself is enough to question the usefulness of those estimates.In this post, we further analyze Freddie Mac’s most recent shortage estimate of 3.7 million units in the third quarter of 2024. The analysis suggests that policymakers should avoid relying too heavily on these kinds of estimates. At the very least, these kinds of estimates are highly subjective measures of the state of the housing market.[...]
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Q_D > Q_S
looks like in real life, or how we'd even know, becauseQ_D
would be unobserved in that instance.