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Housing Supply and Policy – Dr. Albert Saiz

Housing Supply and Policy - Dr. Albert Saiz

Raising housing prices are coming to garner substantial interest
from policymakers and the public. In this short piece, I focus on
elucidating the key interactions between supply and demand that
generate macroeconomic problems and lack of affordability. I make a
distinction between short run and long run housing supply. The main
conclusions are not new: policymakers should be aware of the
Tinbergen rule and use multiple tools to address the multiple problems
arising from housing markets. I also argue that countercyclical supplyside
policies can be particularly damaging. I further advocate for better
data-driven mortgage underwriting models that go beyond mark-tomarket
and try to forecast future equilibrium prices. Finally, I make
an argument for a return to ambitious master-planned city-building
endeavors in Europe’s most expensive cities.

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