NPR. This is The Indicator from Planet Money.
I'm Adrian Ma. And I'm Waylon Wong.
One of the hot topics of the US presidential campaign was housing affordability.
Both candidates talked about what they would do to boost the supply of homes and bring prices down.
The search for affordable housing is a major concern for a lot of people in the US.
People like Olivia Garcia.
She's from Los Angeles and earlier this year Olivia and her fiancee opted to sell their stuff and travel overseas instead of paying LA rents.
We did our traveling because we were like, oh my God it's so expensive.
Just like living here, being in LA, you know, might as well go spend our savings doing this because it'll be cheaper anyways.
Girl math would state that I am making money traveling.
Do you have to take a course in girl math to do it?
Some of us were born doing girl math, Adrian.
But you know, Olivia and her fiancee did eventually return to the US so that Olivia's fiancee could start a new job.
And back in LA, the apartment search was grim.
It's just all around really nightmarish.
The options are pretty slim.
Olivia was feeling what politicians have identified as a housing shortage.
But how many homes would it take to fix the problem?
This gets us into another kind of mathematical conundrum.
A girl math conundrum?
No, housing math this time.
And it turns out, trying to calculate the size of the problem is a bit of an economic brainteaser.
So today on the show, we explain the tricky business of quantifying the US housing shortage.
Thanksgiving was a national holiday created in the middle of the Civil War to unify a country that was split in two.
Learn about the origins of Thanksgiving and how the unity and division that we see at our Thanksgiving tables was there from the very beginning.
Listen to the Through Line podcast from NPR.
The marketing for the movie Wicked has been inescapable.
There's all the green and pink merch and Ariana Grande and Cynthia Rivo have been everywhere.
But does the movie live up to the hype?
We know you've been waiting for this one.
We've seen Wicked and we have thoughts and we'll get to them all, including some weirdly heated opinions on defined gravity.
Listen to the Pop Culture Happy Hour podcast from NPR.
Take a moment to unwind and give thanks this week with NPR's All Songs Considered as listeners share their favorite songs of gratitude.
This song speaks to me and the basic thing is everybody turns, turns and lands in the place that they need to be.
Download new episodes of All Songs Considered every Tuesday wherever you get podcasts.
In the early 2000s, the problem with the US housing market was that there were too many homes.
This supply glut eventually led to a bust in home prices and that contributed to the great financial crisis.
Now the consensus among politicians as well as people in the housing and construction industries is that we have the opposite problem, not enough homes.
But calculating the shortfall has yielded really different figures.
David Wessel studies fiscal and monetary policy at the Brookings Think Tank.
I kept hearing people on the campaign trail throwing out all these numbers about how many houses we were short.
One point five million, three point eight million, five point five million.
David looked into where these numbers come from and he says a common approach to coming up with the housing shortage number is to use something called the vacancy rate.
You take all the housing units in the United States, apartments, single family houses, townhouses and you say from government surveys what percentage of them are vacant.
Now that might sound pretty straightforward but David says it's not clear cut what counts as a vacant home.
Like think about a vacation home.
Some of the estimates count you know the cottage on the lake that you only use six months a year if they do their survey in February and it's empty they count it as vacant.
But other estimates leave that lake cottage out of the equation.
Another example of an ambiguous case is a house that's vacant but unavailable.
Let's say your mother died and you're still cleaning out the house so there's nobody living there but it's not available for sale or rent.
So just this first step in quantifying the housing shortage calculating the current vacancy rate can be tricky.
The next step is comparing the current vacancy rate to a historical vacancy rate that's considered normal.
If the current rate is lower than the so -called normal rate that is considered an indicator of a housing shortage.
But as David explains determining the normal rate opens up another can of analytical worms.
What is a normal or healthy vacancy rate isn't fixed in time.
So think of it. Think about this.
We have a lot better listing services on real estate and you can do a lot of shopping online.
So maybe houses stay vacant less often because it's easier thanks to the technology for a buyer and seller to find themselves.
So you might over time see a falling vacancy rate and these estimates kind of ignore that possibility.
Big players in the housing industry use the vacancy approach as the basis for calculating the size of the housing shortage.
But David says variations in how they crunch the vacancy numbers sometimes results in different figures.
And then there are economists that take a completely different approach to quantifying the housing shortage.
For instance back in 2022 researchers now with the American Enterprise Institute and George Mason University they estimated how many housing units they think would have been built in the U .S.
if zoning regulations and other restrictions did not exist.
Basically they say that if we hadn't had so many restrictive zoning rules we would have had 20 million more houses in 2021 than we actually had.
That's a huge number.
Right. It's 14 percent of the national housing stock.
So we get all these different estimates for the housing shortage which could make you think like OK well what's it all for.
And David himself actually questions the usefulness of a national number for the housing shortage because he points out that housing largely is a local issue.
So a national figure glosses over the differences in housing markets from state to state, city to city, sometimes even down to the neighborhood level.
If anything in the world is not national its housing.
The policies we need are probably very much at the state and local zoning level.
And so in some respects the national thing is almost meaningless.
In California where Olivia Garcia lives Governor Gavin Newsom has described housing affordability as the state's original sin.
Olivia and her fiance did find a place to live in Los Angeles through a website for furnished rentals.
It's only 400 square feet because it's a converted garage attached to a single family home.
Although it does have its own entrance.
The cost two thousand dollars a month which is actually less than the rent they paid on their previous place.
It's the smallest of all the ones we looked at.
We were like OK well this is this is going to be like tight living but you know we're making it work for sure.
This converted garage is a kind of housing called an accessory dwelling unit.
They're also called coach houses or granny flats or casitas and they've emerged as one way to address the gap in affordable housing.
California passed legislation back in 2016 that required cities and counties to allow these units on most residential lots.
Olivia's father who also lives in the L .A.
area actually rents out his own accessory dwelling unit to a family of five.
Olivia says her father's tenants are in tight quarters but making the best of it.
Just like she and her fiance are adapting to their small space.
We have like our own little patio area.
There's like a barbecue and ton of seating.
Like it really just expands the space.
Like you don't feel like you're cooped up in a small 400 square foot little unit.
So I think that's been the best part.
We may see more of these accessory dwelling units popping up as state and local governments change laws to allow them.
David Wessel at Brookings says that home prices and rents, not the vacancy rate, should signal whether these kinds of housing policies are effective.
And speaking of housing policies, tomorrow's episode we'll talk about what the president -elect Donald Trump says he wants to do about making homes more affordable.
This episode was produced by Corey Bridges with engineering by Jimmy Keeley.
It was fact checked by Sierra Juarez.
K. Kincan and Izzor shows editor and the indicator is a production of NPR.
Holiday travel is stressful, especially if you're dealing with family baggage on top of your actual baggage.
I'm going home. I'm going to revert back to old family rolls that are stressful.
And so this traffic jam is the straw that's breaking the camel's back.
But don't worry, we're here to bring you some relief.
Listen to the Life Kit podcast.
We'll help you out this holiday season.
It's almost Thanksgiving.
And if you're hosting this year, how well do you know how to cook the main event?
A turkey in the grand scheme of things?
Not actually that hard.
There's just a couple little things you have to keep in mind.
Requires a little bit of planning ahead.
On a new episode of Life Kit, we talk turkey.
Listen wherever you get your podcasts.
What's good, y 'all?
It's Gene Demby from Code Switch.
And on Code Switch, we are deeply curious about race and identity and the way it shows up in the news headlines or interpersonal loves.
With a wide range of voices in front of and behind the mic, we see how race shows up all over the place.
So come rock with us on the Code Switch podcast, only from NPR.
