Place the Blame Where it Belongs

Home prices and rents are largely determined by housing demand versus supply. Changes in demand for homes are determined by net household formation (new households formed versus those that disappear). Changes in the supply of homes are determined by net new construction (units added, less those lost to obsolescence or demolition). Every household demands one housing unit, regardless of whether the unit is owned or rented. Any factor that does not influence housing supply or demand is of second-order importance.

Read More