A few cooling markets have sparked claims that housing reform is no longer necessary. Post-COVID adjustments shouldn’t distract us from the long-term problem.

With house prices moderating across much of the US, industry professionals and commentators are now beginning to talk about “housing oversupply” in certain markets.



Media outlets and trade groups have offered similar framing.

“[Florida and Texas] not only became red-hot during the pandemic,” Newsweek reported, “but also initiated a construction boom that, once the home-buying frenzy waned, left an oversupply of homes on the market right as the number of those wanting to buy, or able to afford them, was dwindling.”

“The main culprit for slowing price growth?” National Mortgage Professional asked. “An oversupply of homes relative to buyer demand, as affordability challenges and economic uncertainty continue to weigh heavily.”

Maybe these writers are using the term “oversupply” in a way that makes sense in their industries, but what they’re really referring to is a disequilibrium that causes prices to fall. The illogical mistake some people make is to infer from this temporary surplus that we should no longer pursue regulatory reform to increase the supply of housing.

This mistake has found its way into The Washington Post: “Over the next five years, estimates show that demographic shifts and a surge in construction will supply enough units to bring down prices and resolve the housing crisis.” Because of this, the author claims, the Yes in My Back Yard movement’s focus on reforming regulations is unwarranted.

[...]





...read more at thedailyeconomy.org