Kevin Erdmann
@kevinerdmann
I discovered the surprising story of what really happened in 2008 (not enough housing) and accidentally became a housing policy guy.
Poll: Is this combination of trends bullish or bearish? 2 replies are below (Bullish and Bearish) Like a reply to vote for it.
The claim that high housing costs are overstated because homes are larger and families are smaller is so wrong that it qualifies as a lie. kevinerdmann.substack.com/p/no-homes-a...
From 1986 to 1993, the average size of a new home increased from 1,494 sq. ft. to 1,963 sq. ft. Today, the average new home is 1,949 sq. ft. A lot of people are 3 decades into a commitment to a falsehood.
Des Moines builds enough to avoid displacing existing residents. San Diego doesn't. The high price of homes in San Diego is the price families are willing to pay to not be forced to move away from San Diego, which isn't that much different than the price Des Moines residents would pay if forced to.
Resharing this because I think it hit the mark. The Keynes and Hayek Rap Battle, in Hindsight open.substack.com/pub/kevinerd...
I can‘t not share this. It is magnificent. Poetry. The human mind is capable of wonders.
I’ve just seen a 1996 painting titled “Cat at dinner” that anticipates the “Woman yelling at a cat” meme, and I have more questions than answers. en.wikipedia.org/wiki/Woman_y...
The population growth of the Closed Access cities is only above average when they are getting poorer. Agglomeration economies!🤷♂️ kevinerdmann.substack.com/p/another-co...
Happened upon this early radicalizer. The earliest and deepest declines in homeownership were top income quintile borrowers in expensive cities. Mostly voluntary before the crisis. Middle income homeownership only declined after federal regulators cut off mortgage access in 2008. 1/
The vacancy rate in the Midwest is now nearly as low as it is in the Northeast. Does anyone think inadequate housing is similar in scale in the Midwest as it is in Boston & NYC?
If a city faces a natural demand for 10% growth, the effect of not growing on real estate values is an order of magnitude higher than the agglomeration effects of growing. Facets of the Housing Crisis, A Series: Part 4 open.substack.com/pub/kevinerd...
Facets of the Housing Crisis, A Series: Part 3 open.substack.com/pub/kevinerd...
You can see it in real time in Grand Rapids' rent trend. Rents flattened after permits rose to the 4,000 range, then rose again when permits declined, and are flat again now that permits are back to 4,000. 24,000 new homes will reverse that 20% rent inflation and allow new households to form.
Also, btw, my estimate of the nationwide shortage is 15-20 million homes. This is how CONSERVATIVE my estimate is. To meet natural demand for household formation, just permitting 3,700 homes annually would have satisfied my estimate of 24,000 homes in Grand Rapids - lower than the current rate.
btw, in this price chart, it's really easy to see the cost of the shortage in Grand Rapids. The cost is reflected in a premium on land under existing homes across the city. In the poor neighborhood, you can clearly see about a $50,000 premium to the stable pre-2008 price levels. 1/
Just looked up some numbers. It's so effing stupid. Look up at the chart above to see how construction in Grand Rapids was affected by the subprime bubble (2003-2007). Here's how the lending bubble affected prices in a rich & poor ZIP code. Meanwhile, rents up 20% more than incomes since 2015.
Then, we made it illegal for families to get mortgages for those homes, and 20 years into this building depression, if you suggest fixing it to the person paying 40% elevated rent in Grand Rapids, you'll get "Oh, this jackass wants to bring back liar loans! Use your brains, dummy!"
In the YOOL 2026, there are still a lot of Americans - maybe a plurality - who argue that there aren't important structural barriers to adequate housing. It's just so effing stupid. fred.stlouisfed.org/graph/?g=1WPlm
It's hilarious how exactly it matches up. But, it's also sad how easily Americans can be lured into stepping all over the rights of corporate entities.
Here's a chart I posted a couple of years ago that I think helps visualize housing costs. Blue: Baseline avg housing price Green: Baseline + cyclical deviations Red: Effect of supply crisis Black: Measured avg home price (supply crisis + cycles + mortgage crackdown)
Ending the housing crisis will, among other things, require about 5 million vacant homes. 5 Million Vacancies open.substack.com/pub/kevinerd...
The drop in labor income and the rise in corporate profit as a % of GDP are largely unrelated. Labor Income mostly went to rent. Higher profit is from foreign profits and much lower interest expense (bc corporations are much less leveraged than they used to be). Domestic operating surplus is flat.
The poorest neighborhoods in the city whose population is estimated by the red line have become especially expensive over this period of time, and no matter who you hear having a conversation about it, someone will say, "The problem is everyone wants to live there."