By Guy Laetan
July 25, 2025
https://medium.com/@gaetanlion/california-does-not-have-a-housing-supply-shortage-a4d4fa4a162b
Everyone believes California does have a housing supply shortage because of its staggering home prices. But, it does not. Its home prices respond to qualitative factors independent of housing supply.
Everyone from Sacramento to luminaries within the centrist-left believe California has a huge housing shortage confirmed by its staggering home prices. Ezra Klein and Derek Thompson in their recent book “Abundance” say that much. Noah Smith and Paul Krugman, among my favorite economists pile on this same argument that seems irrefutable:
Housing supply shortage = Exorbitant house price
How can I argue against this apparently most logical economics argument, and argue against experts and pundits I truly admire?
Well, I am not alone in my dissent. Many others have conducted studies on the subject and educated me that the star-experts’ consensus is not on solid ground. The problem is that the low profile experts don’t have the Media exposure of Ezra Klein, Paul Krugman, etc.
Now, there may be a game changer. A very high profile economics team came up with a shocking analysis (not shocking to me) that the national housing supply shortage is far lower than anyone assumed. And, that California may not have a housing supply shortage at all.