We Don’t Have a Housing Shortage

Depending on the narrator, the blame for “housing shortages” lands on zoning boards, hedge funds, foreign buyers, retirees who refuse to downsize, or permitting offices in tiny counties. Regardless, the solution always lands on “build more housing, faster, and all will be well.”

But in my opinion, this problem doesn’t exist. Show me a single person with the ability to pay and of sound mind who’s living on the street. We’ve had an abundance of housing built in the last 5 years, and all it’s yielded is more expensive apartments.

We are retained by some of the most active investors to solve upside down capital stacks and rehabilitate broken business plans. While many believe that a debt restructuring advisor’s job is limited to being a tough negotiator, my day-to-day job is to build consensus by digging through the noise and uncover fundamental truths that are otherwise framed and presented through the lens of agenda.

Only by simplifying things can one properly address challenges that otherwise seem impregnable, because typically, your counterparty truly believes in their position and all the supporting statistical research.

This is compounded by characterizing the series of minor, yet impactful challenges, such as zoning, process and more as the problem preventing the solution from being solved. Given that these challenges have all at some point been something with which the developer community has struggled, presenting its removal as the solution seems like making all the sense in the world.

So, when you show them statistics, the hammer always thinks the issue is a nail. But the truth is more nuanced, and the longer it is neglected, the more cake we are asking the average blue-collar worker to eat.

A Wage-and-Price Problem

In Q2 of this year, the Census Bureau counted 149.5 million housing units, of which 15.6 million (10.5%) stood vacant. Roughly 6.5 million of those empty units are offline. The National Low Income Housing Coalition’s (NLIHC) The Gap report found a national shortage of 7.2 million affordable and available rental homes for the 11 million poorest renter households.

Since 1985, the price-to-income ratio (the price of a home versus the purchaser’s income) grew from 3.6 to 5.0. The median household income is up 254 percent in the same period, while the median price of a new house is up 399 percent.

Furthermore, between 2014 and 2024, rentals priced below $1,400 a month fell by 9.3 million, while those priced above $1,400 grew by 11.8 million.

We’ve Tried “Build More”

Roughly 608,000 apartments were delivered in 2024, more than in any year since 1986. 488,000 more were delivered in 2025. And yes, rents did fall 0.6 percent year over year in Q4 2025, but for perspective, a $1,100 rent falling by that amount brings it to $1,093.40 per month.

Despite this, building more units is attacking the wrong side of the equation. Incomes have just not kept pace with costs, and more supply (when governed by realistic construction costs) has no impact on the income-to-housing ratio.

We need to alleviate the fact that 49.4 percent of renters meet the definition of cost burdened (spending 30 percent or more of their income on housing), with 22.7 million renters spending over 50 percent. Rezoning a parcel or unlocking development restrictions does little to help the average income.

The Realities of Cost

It’s basic economics that if you want to live in New York City, you’ve got to pay more for the opportunities that come with living in NYC.

The housing scarcity issue scaled up by pundits is really focused market by market. NAR’s cost-burden figures put Kokomo, Mansfield, Dubuque, Lafayette, and Green Bay in a different country from Miami, Napa, and Los Angeles. In those Midwestern metros, 12 to 14 percent of owners spend more than 30 percent of income on housing. In Miami it is 36.5 percent. In Los Angeles it is 34.1 percent. In a lot of smaller Midwestern cities, a $60,000 income still buys the median home, but you cannot legislate San Jose into that math.

Even if you forced more supply into the expensive markets, the cost of putting a building in the ground doesn’t decrease. New York and San Francisco sit 35 to 42 percent above the national construction-cost index. Cheap housing in a weak labor market offers little upward mobility prospects, and many that spend half their income on rent in more expensive markets do so with the hope of growing their wealth and opportunities.

A standard-grade house that costs about $324,000 to build nationally is already in the mid-$400,000s in those cities before land, entitlement, insurance, or delay. You cannot build a cheap apartment on an expensive cost basis, and the unit is expensive because it cost a great deal to put it there.

So, You Want To Build To A Loss?

While the "Build more and prices come down” argument technically works, the developers trumpeting it want us to believe that they are against their own profitability. Let’s call it what it is: left without guardrails, developers would build just until the music stops and leave banks holding the bag.

Infinite supply, if even possible without exhausting natural resources, would crush rents. But why keep building at a loss? If rental rates fell to what the advocates clamor for, the cost basis would still be sitting there, and the project would be underwater.

Furthermore, supply of units don’t reduce operating costs. Property taxes climbed 31 percent between 2019 and 2025, while average monthly homeowners insurance premiums jumped 72 percent, though growing at a slower clip in first half of 2026.

An owner squeezed pushes rents past what the tenants can pay or when prevented by rent controls, lets the building run down.

The ROAD to Housing Act is More of the Same

The 21st Century ROAD to Housing Act is a development bill that treats a supposed shortness of housing with a one-size-fits-all solution. If the problem is that costs outran pay, and that people want amenity cities they cannot afford, then adding units does not close the wage gap and does not turn San Jose into Kokomo. You will not get rational capital to build the unit that makes the last unit a loss.

Congress wrote this wrong idea into law this summer. The Act is the first big housing bill to pass with both parties behind it since the 1990s. Read the text, though, and you’ll realize that the bulk of its intent focuses on removing barriers to development, untangling red tape and allowing the market a clear path to correct itself with new supply. But nobody’s rent is too high because a variance took too long. The law puts up no new money to build or hold onto homes the poorest renters can pay for.

As far as I can tell this is the only “crisis” where the loudest advocates for the cure are also the people paid by it. Some zoning is dumb and permitting is slow, and the 2025 rent figures say new supply suggests something. Where they stay vague is on whom new construction does something for.

There is no shortage of housing. There are expensive cities, cheap cities, and a growing split between people whose earnings cleared the price and people whose earnings did not. The advocates renamed that split a scarcity, because a scarcity is something you can pass a bill about. A price is just what it costs to live where you want to live.

A Caveat, To Be Fair

The opinions voiced herein are based on a high-level suspicion of interested parties proposing solutions to problems that they’re not properly articulating. Additionally, there’s certainly a need for new housing stock in certain markets and easing of the various problems with the proposed solution will help around the edges and generally make the market more efficient.

But that being said, to quote Mark Twain, ”There are three kinds of lies: lies, damned lies, and statistics.” People are going to use whatever data is out there to make a point, and the point I’m making is you haven’t proven it to me.

Perhaps the fault is in how the problem is expressed. Perhaps the fault is that the problem isn’t as clear as people want to believe it is. Nonetheless, without a clear problem, it’s impossible to have a clear solution. All this being said, I challenge anyone to provide a very clear articulation of the problem that doesn’t conflate conflicting arguments to promote an agenda.

If you have thoughts, write back — these often end up as fodder for the next Note.