The Long Way Home 10.10.25

The headline for an article in the October 1 issue of the online newspaper Minnesota Reformer screams, “Home sales on track for worst year since 1995.” That shouldn’t be happening with what I call “The Great Housing Shortage Myth.” 

In my previous life in Cook County 30 years ago, housing and worker shortages were the top issues. In 2022, county officials and their consultants determined that 500 new housing units would be needed over the next four years. Recently, a significant number of apartments, far fewer than 500 units and euphemistically referred to as “workforce housing,” have been built, with more on the way. The consensus in local government is that more housing is needed so its economy can continue growing. Growth is assumed and thought to be desirable. I’m not so sure, but as a poor, dumb freight broker, what do I know?

Experts agree that the U.S. is in the grip of a significant housing shortage, with estimates ranging from 3.5 million to over 7 million units. This crisis, attributed to more than a decade of underbuilding, rising demand from millennials, and high construction costs, is a pressing issue. For many in Cook County, affordability is the primary issue.

One thing should be clear: we can’t build our way to affordability. We don’t need millions more homes; we need better policy. Like the 10,000 steps and eight glasses of water daily mantras, building millions of new housing units misses the point.

The 'shortage' calculations often ignore the large number of existing vacant homes and apartments in some areas. A glut of empty homes in one location, or homes used as short-term rentals/investments, paired with high prices in desirable areas, points to a misallocation issue, not a raw lack of physical structures. This misallocation issue is a clear sign that we need to work towards a more balanced and fair housing market.

Data indicate a high rental vacancy rate nationwide, reaching a rate of up to 7%. Homeowner vacancy rates are approximately 1.2%. The housing crisis is fundamentally an income crisis dressed up as a supply crisis. The so-called affordable units set aside in current Cook County housing projects remain financially out of reach for many workers and families. 

Building millions of high-end, market-rate units across the county will not alleviate the cost burden for those who need help the most. It only addresses the shortage, if one exists, for higher-income earners.

Cook County is considering zoning reform that would allow property owners with more than ten acres to develop additional housing on their land, provided it shares a common septic and well. This proposal, called an Open Space Overlay District for properties zoned Class 2 and 3, could help address the affordability issue for suitable new housing by allowing for more efficient land use, density, and a higher housing supply—a great idea.

Across the country, large corporate entities funded by private equity firms purchase single-family homes and apartment complexes for rental/depreciation profit. This process, which can be beneficial for home sellers, constricts the available supply for first-time homebuyers and families looking to move into the area. Private capital buying binges drive up the baseline price of housing regardless of new construction starts.

Some argue that if we build more housing, prices will eventually come down for everyone. The trickle-down theory of housing costs. I don’t believe it. We cannot wait decades for a glut of new construction to lower the price of entry-level homes. We need immediate, targeted interventions that address price and income.

I’m always suspicious of these proclamations about what our country needs. Repeated ad nauseam by politicians and the media, these proclamations and projections become conventional wisdom. Conventional wisdom can be a useful mental shortcut, but it is often wrong. And too frequently, the powers that be are unwilling to challenge it. “Our economy has to grow,” is a great example. Conventional wisdom often hinders the development of new ideas and creative problem-solving. 

So, what can we do? 

We could encourage owners of perpetually vacant, non-primary residences to put those on the market by implementing or increasing property taxes, effectively creating a vacancy tax.

We could close the gap between existing incomes and high market housing prices to address the affordability shortage directly. 

How about limiting the number of homes that institutional and corporate buyers can own? Or assessing a heavy tax against a reasonable limit?

This housing shortage crisis isn't about the number of nails we pound; it's about whether the homes we already have—and the homes we plan to build—are being treated as shelter or as speculative financial schemes.

We must choose shelter.