The 'Goldilocks' Problem of Housing Supply

All over the country, housing markets are faced with too much supply, too little supply, and just the right of supply.

1 minute read

December 18, 2018, 5:00 AM PST

By James Brasuell @CasualBrasuell


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Jenny Schuetz describes the "Goldilocks problem of housing":

Nearly a decade after the Great Recession, U.S. housing markets show signs of two very different problems. Metropolitan areas along the Northeast and West Coasts are building relatively little new housing and have seen sharp price increases, due to tight local land use regulations. Older industrial cities, particularly around the Great Lakes, and many small Heartland communities have the reverse problem: too much housing, leading to high vacancy rates, long-term price declines, and neighborhood blight. But in other parts of the country, particularly metropolitan areas in the South and Southwest, housing markets are closer to the elusive “just right,” achieving a better balance between housing supply and demand.

The analysis that follows lists the root causes of housing imbalances, describing the consequences of important characteristics of the housing market.

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