Charts of the Day: Our Coming Housing Boom

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Here are two charts about housing. The first is from Brad DeLong, and it shows how much housing was overbuilt during the boom of the aughts. The blue line is trend growth, and the orange triangle that goes from 2002-07 amounts to about $300 billion dollars in excess housing. Since then, however, we’ve been massively underbuilding housing. That’s the orange block that starts in 2007, and it already amounts to $1.2 trillion. It will probably add up to $2 trillion or more by the time we get back to the trend line. That’s a net undersupply of $1.7 trillion.

The second chart comes from Calculated Risk, and it shows the apartment vacancy rate. During the recession it rose to about 8% as people left their apartments and moved in with family or roommates. (This shows up in statistics as a slowdown in the rate of family formation.) However, as the worst of the recession recedes, that number is coming down, and today it’s nearly at its normal pre-bubble level of 5.5%. If the economy continues to recover, we’ll very soon hit a point at which there are lots of people who want to rent or buy a home but there will be a huge undersupply of both single-family and multi-family housing to absorb them. Karl Smith is unnerved:

There is a huge demand bulge waiting in the wings. There is no supply coming on line on absorb it. Rental vacancies are already falling.

This is setting up to be the story of 2012 and it is setting up to be a doozy. Inflation creeping higher despite the Feds best efforts to tamp it down. A possible explosion in the growth rate if we get a virtuous cycle of more construction job leading to more household formation, leading to more construction jobs.

Maybe! As Brad points out, this all depends on unemployment falling enough to generate lots of new families that want — and can afford — a place of their own. So far, there’s not much sign of that happening, and American families continue to have a huge debt overhang that’s likely to keep demand sluggish. Still, if housing keeps getting tighter and employment starts to rise even modestly, we might indeed get the virtuous cycle that Karl talks about. We’ll see next year.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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