What data and methodology determines a housing supply shortage?

The term 'housing shortage' is used by NMHC and other trade groups, then repeated by all development companies and the government. But what data goes into the model that shows there being a shortage of housing units? 

There are several markets with 10%+ new supply ratios, as well as decreasing rents and occupancy rates.

The term 'housing shortage' doesn't seem dynamic to me where other variables are accounted for, like market, HHI's, etc. 

Isn't there too much housing (from an investor's point of view) in some markets... like Indianapolis, Houston, ATL, etc.?

I've asked a few grey-haired real estate pro's this question; how exactly do you know there is in fact a "US housing supply shortage", and I haven't received data-backed convincing responses.   

Is there a macro US housing supply shortage?

Yes
75% (6 votes)
No
25% (2 votes)
Total votes: 8
 

It's a matter of definition. There isn't "too much housing" in the markets you mentioned. There is just too much new housing to support the current rents / housing prices in the short term. 

Housing is slow moving meaning that it takes people a while to make decisions on moving, where to live, buying vs. renting, waiting out their contracts, etc. So when new supply hits a market, you see pullbacks in rents / housing prices because it takes a while for them to fill in the gaps. That doesn't mean there isn't a high-level housing shortage though. 

 
Most Helpful

When you look at a place like Atlanta there is oversupply in some of the core submarkets like Midtown and Buckhead for multifamily, but looking at it MSA wide there's clear undersupply. It costs the same to rent an apartment 40 miles outside of the city as it does in Midtown right now. The single family market is also severely undersupplied and I think the main direction of comments regarding housing shortage mainly because all of the easy to develop or easy to entitle land is gone unless you go 50+ miles out. That applies to most Sunbelt cities.

 

Ullam odit illo omnis esse sint possimus expedita. Laborum sapiente dolore rerum qui et cumque harum. Et expedita impedit eum omnis amet quisquam et.

Eius id repudiandae omnis ratione dolorum. Accusamus sit deserunt distinctio voluptas aut incidunt.

Career Advancement Opportunities

June 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Perella Weinberg Partners New 98.9%
  • Lazard Freres 01 98.3%
  • Harris Williams & Co. 24 97.7%
  • Goldman Sachs 16 97.1%

Overall Employee Satisfaction

June 2024 Investment Banking

  • Harris Williams & Co. 19 99.4%
  • Lazard Freres 06 98.9%
  • JPMorgan Chase 09 98.3%
  • William Blair 03 97.7%
  • Morgan Stanley 04 97.1%

Professional Growth Opportunities

June 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.9%
  • Perella Weinberg Partners 18 98.3%
  • Goldman Sachs 16 97.7%
  • Moelis & Company 05 97.1%

Total Avg Compensation

June 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (22) $375
  • Associates (94) $260
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (69) $168
  • 1st Year Analyst (207) $159
  • Intern/Summer Analyst (151) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
CompBanker's picture
CompBanker
98.9
6
kanon's picture
kanon
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
bolo up's picture
bolo up
98.8
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”