2020 to 2022...Sudden Housing Shortage or $ Surplus?

Quick autopsy of how housing became so unaffordable...with particular focus on January 2020 through July of 2022. Housing prices exploded during this 2020 to 2022 period and the narrative suggests that it was due to decade(s) of underbuilding. Let's see where this goes.

Chart #1- black line=YoY population change blue line=YoY household change brown line=housing permits Focusing on '20 to '22, you'll notice the lowest population growth in modern US history versus the highest explosion in US households amid an uptick in permits.

Chart #2- Same as above, except... red line=YoY change in federal debt Amid decelerating population growth, note accelerating deficit spending and debt growth...particularly in the '20 to '22 period...seemingly drawing a massive surge in new HH's (likely tied to PPP, stimulus, etc.).

Chart #3- black dashed line=total US housing units green line=full time employees red line=home price index Housing is typically driven by those that are mortgage worthy, generally full-time employees. Note that during '20 to '22 period, nearly 4 net new housing units were created for every one net new full-time employee (almost 4 million net new housing unit's vs less than 1 million net new FT employees).

Chart #3.1-

Same as above but changing out publicly held federal debt (aka, marketable debt) vs full-time employees and housing units.

Chart #4- red line=YoY change 25 to 54yr/old population blue columns=YoY change 25 to 54yr/old employees white line=employee to population ratio (the quantity of employed 25- to 54-year-olds to the population of 25 to 54yr-olds).

Chart #4.1-

red line=YoY change 15 to 74yr-old population blue columns=YoY change 15 to 74yr-old employees white line=employee to population ratio (the quantity of employed 15 to 74-year-olds to the population of 15 to 74yr-olds).

You can only grow employment if you have a growing population...once the population is "fully employed", hard to grow employment any further. But the declining "full employment" % is due to the significantly larger population growth among the 55+ and 65+yr/olds versus minimal 25 to 54yr/old population growth...sending each successive "full employment" peak lower. Note we hit "full employment" in late 2022 and declining since (this is all to explain the minimal FT employee growth taking place since '22 and the minimal further FT employee growth upcoming...just demographics).

Lastly, just going to post charts of 20 Case Shiller tracked metropolitan areas (MSA's) versus employed persons, Federal Reserve set FFR%, and Federal Reserve held Mortgage-Backed Securities (MBS). Take a close look at the '20 to '22 period and note the explosive RE price growth in many areas with significant declines in employment, many with actual depopulation during that period, and significant housing unit growth...versus ZIRP and a doubling of MBS holdings. You decide what pushed housing prices...and if further government intervention is something that is warranted?