Solving the Wrong Problem

The Housing "Shortage" is a Utilization Crisis, Not a Supply Failure

A recent push by industry leaders, including Realtor.com CEO Damian Eales, argues that the U.S. is facing a "catastrophic" shortage of roughly 4 million homes. Their solution is singular: "Let America Build." They suggest that until we close this 4-million-unit gap through massive new construction, the "economic divide" in America will only widen.

While the "shortage" makes for a compelling headline, a 20-year lookback at U.S. Census and property data suggests we don't have a roof shortage but rather a tenure and utilization crisis brought about by market interference from our very own Federal Reserve, the virtues of which are a debate for another article.

The industry often confuses active inventory (homes currently for sale) with housing stock (total physical units). When we look at the total number of physical structures in the U.S. compared to the number of households, the math tells a different story. And when we frame the problem as a “shortage of roofs,” we distort reality and move further away from effective solutions.

Below is a 20-year trend of US Households vs. Total Housing Stock. Note that the physical "supply" of housing has consistently outpaced the number of households. The top line includes 5+ unit housing (apartments). The bottom/green line does not.

If we have 148 million units and only 134 million households, where are the other 14 million homes? The "shortage" cited by Realtor.com (4 million units) is dwarfed by the number of homes that are physically standing but unavailable for primary residency.

While second homes play a limited and decreasing role, the most significant shift in the last decade isn't that we stopped building; it's that investors (largely mom-and-pop) began outcompeting families for the existing stock.

In 2005, only 1 in 8 homes was bought by an investor. By 2025, that number has jumped to 1 in 3. This trajectory suggests that even if construction increases (as advocated by Realtor.com and others), a sizable portion of that supply is being diverted away from families and into investment portfolios.

As such, this "shortage" is not just a failure to build; it is a failure of the current market structure to prioritize shelter over asset accumulation.

Below is chart of total investor-owned concentration of single-family homes over the past 20 years.

The data shows that 20% of all single-family homes are now investor-owned. If investor ownership reverted to 2005 levels, 9.3 million homes would return to the owner-occupied pool, more than double the inventory “shortage” noted by Realtor.com and others.

·       America doesn’t have a housing shortage.

·       America doesn’t have an interest rate problem.

·       America doesn’t have a loan product problem.

We need to discontinue tired narratives designed to solve problems we don’t have.

America has a “utilization gap” problem, largely brought about by the policies and actions of our Federal Reserve since The Great Recession.

This is the problem that no one discusses. And this is my solution.

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