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The basic principles of the market economy are simple. If somebody is willing to pay for a product, somebody else is likely to make it. If many people want to buy, the price goes up. When the price goes up, more people want to make it until they meet the demand and the price goes back down. So why is that not quite working in the U.S. housing market?
Prices go up and up, which should encourage more construction. And still, there are not enough homes to meet demand. Turns out, there are not enough people who know how to build houses.
Here's Sarah Gonzalez from NPR's Planet Money podcast.
SARAH GONZALEZ, BYLINE: It's not just a problem in the big coastal cities. All over the U.S., there's a housing supply shortage - in rural areas and small towns, too, like Blacksburg, Va., which has just 15,000 permanent residents and 30,000 college students. Homes are flying off the shelf there.
KIM THURLOW: So average days on market for a for-sale home is less than one right now.
GONZALEZ: Less than one day?
THURLOW: Less than one day.
GONZALEZ: Kim Thurlow works on housing initiatives in Blacksburg. And, she says, there are just 27 homes for sale right now. And 10 of those homes haven't even been built yet. So there is just very little housing stock.
THURLOW: And that is causing a rise in prices. And it's causing a bidding war.
GONZALEZ: According to an analysis by Freddie Mac, there're about 3.8 million fewer homes than we need to meet demand. And it all goes back to the 2008 housing bubble. There were just a glut of homes on the market back then. They were losing value. It didn't make sense to build more. So we didn't.
JENNY SCHUETZ: We stopped building houses since the construction industry basically shut down.
GONZALEZ: Jenny Schuetz is an economist at the Brookings Institution. She says the U.S. underbuilt for years. So like, in the years before the housing crisis, we were building about 2 million new homes each year. In the years after the housing crisis, we were building, like, 600,000 homes a year. So that is at least a million homes each year for years that didn't get built.
And all of that underbuilding made people avoid the construction trades. So now we're in a situation where we need to build more houses fast. But there are not enough skilled people to do it.
SCHUETZ: That takes a long time to fix.
GONZALEZ: The town of Blacksburg is dealing with this right now.
Kim Thurlow called it a trade crisis.
THURLOW: We are really lacking skilled trades in our area.
GONZALEZ: And, Thurlow says, the push over the past few decades to get students to go to college and get white-collar jobs is also to blame.
THURLOW: And it's not true that trades will make less money than many white-collar jobs.
GONZALEZ: So like a lot of places, Blacksburg is now trying to get people to go into construction again, like by offering free community college to people going into the trades.
THURLOW: But it's going to take some time to try and reverse that issue.
GONZALEZ: Do you see the housing shortage ending anytime soon?
THURLOW: Not in the next decade.
GONZALEZ: Not in the next decade.
A lot of experts agree it will take years to catch up. We just won't be able to build enough homes fast enough.
Sarah Gonzalez, NPR News.
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