Source: EconLog
by Tyler Watts & Joel Watts
“The economics of housing affordability is very straightforward. If prices have gone up, either demand has shifted right, supply has shifted left, or some combination of the two. While supply constraints are the major culprit in the affordability problem, we want to acknowledge that buyers are partly responsible for the market shifts that we’ve seen — it takes two to tango. Housing is a normal good with a long-run income elasticity of demand close to one, meaning housing demand rises in tandem with household income growth. To bring prices down, we need builders to shift the housing supply curve ‘out and right’ by a larger factor than buyers are shifting the demand curve.” (12/02/25)
https://www.econlib.org/econlog/barriers-to-affordable-housing/