What the Microchip Shortage Reveals About Housing

The microchip shortage facing the automotive industry illustrates the significant impact that supply has on the cost of durable goods.

1 minute read

January 26, 2022, 9:00 AM PST

By Diana Ionescu @aworkoffiction

Texas Apartment Construction

Trong Nguyen / Shutterstock

In his newsletter, Matthew Yglesias analyzes the recent microchip shortage in the automotive market in the context of lessons it can teach those who study the housing market.

Yglesias notes that the curtailed production of new cars during the shortage has led to a rise in prices for used cars and trucks—signaling that a constraint on the supply of new durable goods—like a car or a house—does have a measurable effect on the cost of used items in the same category. Consequently, even the cheapest used cars became difficult to afford as supplies failed to keep up with surging demand. Meanwhile, most experts agree that rising vehicle prices aren't due to vacancies, speculation, or greedy manufacturers—even though those things do exist in both industries. Unlike in the housing market, Yglesias contends that, when it comes to cars, "we are having a pretty reasonable policy debate" about how to prevent future supply chain disruptions like the chip shortage, in part because we have a "living memory" of a well-functioning auto market.

According to Yglesias, the clear-cut evidence from the auto industry should be illustrative to housing advocates who often don't believe that more market rate housing will ease cost pressures on older housing stock.

Thursday, January 20, 2022 in Slowboring.com

Aerial view of homes on green hillsides in Daly City, California.

Depopulation Patterns Get Weird

A recent ranking of “declining” cities heavily features some of the most expensive cities in the country — including New York City and a half-dozen in the San Francisco Bay Area.

April 10, 2024 - California Planning & Development Report

Aerial view of Oakland, California with bay in background

California Exodus: Population Drops Below 39 Million

Never mind the 40 million that demographers predicted the Golden State would reach by 2018. The state's population dipped below 39 million to 38.965 million last July, according to Census data released in March, the lowest since 2015.

April 11, 2024 - Los Angeles Times

A view straight down LaSalle Street, lined by high-rise buildings with an El line running horizontally over the street.

Chicago to Turn High-Rise Offices into Housing

Four commercial buildings in the Chicago Loop have been approved for redevelopment into housing in a bid to revitalize the city’s downtown post-pandemic.

April 10, 2024 - Chicago Construction News

View from middle of River Seine in Paris with Eiffel Tower on right side.

Seine Pollution Could Hinder Olympic Swim Events

Events like the triathlon could be impacted if tests continue to reveal high levels of dangerous bacteria in Paris’ famous river.

36 minutes ago - Euronews Green

Four-story light-colored multifamily apartment building.

How Financing Restricts the Rental Housing Market

The way apartment buildings are financed has a major impact on supply and costs.

1 hour ago - Strong Towns

Texas Bike Lane

Houston Mayor Pauses Complete Streets Projects

The move raises concerns among road safety advocates who point out that traffic deaths continue to rise.

2 hours ago - Governing

News from HUD User

HUD's Office of Policy Development and Research

Call for Speakers

Mpact Transit + Community

New Updates on PD&R Edge

HUD's Office of Policy Development and Research

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.