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[Music] welcome to the dearwood realy YouTube channel I'm John shank founder and managing broker of dearwood realy in St Louis Missouri well building ghost towns huh I was uh I was looking at the Twitter and I I saw this post and I wanted to kind of go over with you and just see if if it makes any sense now look everybody can can argue back and forth about about stuff right I mean we can always haggle about statistics and everything but I kind of I was kind of taken back by this one and I wanted to share it with you so here we go um let's make sure I did that right yeah all right now we'll go here sorry about that it says this is from economica now I uh I put the link in the in the description and he kind of steals stuff every once in a while I've seen him steal some stuff off off of others from Twitter so I'm assuming this is his own research but who knows right so it says anybody spend any time going through the Nar housing shortage tractor that's the National Association of real estate Realtors sorry um tracker it says what you may notice are the majority of Metro areas 174 actively tracked deemed to have a a housing shortage I'm using the total shortage are in the areas that have long-standing depopulation long-standing declining total employees amid slowly growing housing stocks almost no Metro areas with population and job growth are deemed to be in any shortage think about that a little bit it's akin to suggesting that much of world Japan is in a housing shortage due to a lack of new housing being built so what is he saying so he's saying look in the places where there's light employment okay like why would you need more housing now you know let's just do supply and demand fund if there's more Supply than there's demand the price should go down did I do that right I don't know I I have to look back I'm not changing it if there's more Supply than there is demand the price has to go down that's that's the way it should work in in economics now I've argued for quite some time that there seems to be plenty of houses available for sale for investors so wouldn't that mean that there's plenty of plenty of Supply available well no the investors are taking up the stock of the single family home buyers those would be owner occupants now I'm not I'm not here to vilify investors I'm just saying it seems like they've taken up much of the market now you can argue about how much that's how much that is but we're not going to get into that right now we're going to go over this so let's first get into the tab that shows this housing shortage tracker here it is it's just a little thing and it goes It goes you can pick any place you want to you know like so right here in St Louis well if I do that it says it's uh there's a need for more permits in the city of St Louis from the St Louis area Okay so going back to this now let's just look at some of the places so this is the graph that he made metros with the highest housing shortage according to the National Association of Realtors housing shortage tracker okay so Anchorage Alaska okay now you have to look at the chart and I'm just want to make sure it's clear for you guys okay looks pretty good so in 2000 you had 320 uh and then you had 121 in the home price index and 149 in employees and so it just kind of going kind of Meandering down you got to 181 right now uh the home prices are going up your population's going up okay so that seems that like there there should be a short that seems that there should be more houses being built West Virginia you've got employment going employees going down you've got home prices going up over the population which is also going down well why would you need more houses in a place where the population and employment is going down in the shortage tracker the idea is it's based on historical average one permit is issued for every two new jobs it says however that is not the case for many metropolitan areas see below which metropolitan areas need to build more houses in order to in order housing Supply to keep up with The increased demand for housing well Huntington West Virginia doesn't look like that's the case akan Ohio employees 330,000 340 a number of years later 23 years later prices are shooting up over the population which is going down or stayed the same holu Hawaii same thing right selenis California I I think it's Selenas population has gone up prices did go up and then get hammered during the the uh great financial crisis population going up a little Springfield Illinois I don't know how can all these places have these skyrocketing prices when their population is going going down makes you wonder Santa Barbara 450,000 employees going up so that's okay New Jersey employment going down house prices going up population still going up a little bit Syracuse New York population Remains the Same employment lower home prices higher so you get the point right here's Cleveland Cleveland you got employees going down employees house price up population down south Ben Indiana have you ever been to South B Indiana like the home of Notre Dame football I went there I thought I was going to I thought I was going to be impressed and not not not impressed employees down now if you're from South Bend please you know I'm not trying to kick you I just wasn't wasn't what I thought it was going to be uh population okay right but there's an idea right that you need more employment I don't want to mess with you with just doing that but there's this idea that you need more employment for there to be new houses built and these places are not getting more employment so why do they need more housing seems to make sense seems to make sense right let go right over here real quick so how is it like it's it should be if if if there's population growth okay and job growth the combination of the two there should be a need for more housing if there's depopulation and declining total employees there should be less need there should be no shortage or very little and yet that's how seem that that's how it's looking like this graph is where these crafts are I had some thoughts I had some some things I wanted to point out so one of the questions I had is how does the National Association Realtors Define a housing shortage and why might this definition be problematic in areas with declining populations well you can see that they're using it based on building permits issued and if the population is declining this this is you don't want to be building into a population decline or a job decline right or do you this it's always weird to me let me let me put it to you a different way I have a friend lives in a neighborhood 5 years ago houses were $200,000 in that neighborhood all day long and they were nice houses three bedrooms two baths 1,400 Square F feet okay same house today $340,000 every day of the week right he's happy he's like great great we're going to get more when we sell our house he does not care about the tax increase so he's happy that house house prices are high but if you're a buyer and you go from 200 to 340,000 on on the same home you're not very happy right so it depends on what side of the spectrum you're on in these places where you have declining population where you have declining employees number of employees maybe people are happy that the houses are going to be more affordable you know maybe maybe this isn't the best way to track this type of thing number two what are the potential consequences of misidentifying areas as having a housing shortage well this could be disastrous disastrous economics is all about the best utilization of the resources you have I mean we're going to be building houses in places that they don't need houses so those houses will be cheaper and there'll be less profit less profit is bad because you need profit for businesses to be in existence over time even public companies have to make a profit at some point how could the meth methodology of the housing shortage tracker be improved to more accurately ref reflect the needs of different regions I don't know I've I've never really liked I've I've I've always felt like there should be some sort of delay when discussing home units being built uh for instance like I mean I hate to use 2008 but I mean how many building permits were issued but how many homes were actually built it it should almost be like there should be a lag there should be a lag I don't know how long that's one thing maybe there's a waiting for the population decline a waiting not to wait but a waiting and it says what role do local government policies play in exacerbating or alleviating perceived housing shortages well I don't I don't think that the I don't think that there's ever been a time in my life where they've said that they've built too many houses like houses are too cheap we need to stop building them and it kind of makes you wonder you know we talk about nimi not in my backyard how many I know I mean no I'm not trying to be disrespectful how many Boomers don't want multif family units in their pristine neighborhoods and how might misclassification impact real estate investments in the local economy in these areas well I mean let's just look at the employment numbers coming out of of the Bureau of Labor Statistics the CBI number do you have any faith in those numbers being released I don't I don't because they always they always seem to be pretty good and then they Revis down whatever would benefit the regime and I mean that Republican or Democrat I don't know how much control we should be putting on our elected leaders to uh you know be determining where the best spend the capital I really don't I mean I think that they should be facilitating um you know I mean there already have zoning always have they have green mail I don't know I just thought it was very interesting I thought it was interesting an interesting way to look at it how can it be that the higher population areas with employment growth are not shown to be in a deficit I don't know Ponder leave me a comment like the video watch till the end that would help me a lot I'd appreciate it that's all I have for you tonight thank you for watching thank you for listening and I'll catch you on the next one