Fits And Starts: Housing Business Leaders’ Biggest Risk

Housing’s bumper crop week of economic releases continues today, with the Census Bureau’s New Residential Construction

There are sharp limits on supply in all of these sectors because regulators make it hard to increase supply (zoning laws make it difficult to build housing), training and hiring workers is expensive (adding classrooms means adding teachers and teacher aides, and expanding health insurance requires more doctors and nurses) or both. “This can result in a vicious cycle in which subsidies for supply-constrained goods or services merely push up prices, necessitating greater subsidies, which then push up prices, ad infinitum,” they write.

This helps define the dilemma, but solutions hide in what appears to be an unsolvable knot, the “choke-point” of housing scarcity.

For solutions, policy-setters and lawmakers must focus on market-driven supply, for sure. That choke-point means – as well – private sector construction players need to play a part in improving productivity and capability to expand their addressable universe of customers with more attainable offerings. And it means that capital investors and allocators need to expand the equity opportunity for a wider, more regenerative, net of stakeholders, rather than an ever-shrinking few financial beneficiaries.

As Klein concludes:

To ensure tomorrow is radically better, we need to look for the choke points in the future we imagine, the places where the economy can’t or won’t supply the things we need. And then we need to fix them.”

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