Housing Isn't Scarce
The will to make it available is.
Photo by Tierra Mallorca on Unsplash
In the next few months my family will enjoy a very nice milestone. We won’t have a mortgage anymore. We will own our home outright and not have to pay thousands of dollars per month to have a place to live. It will be nice to have the home we live in as an asset, but for the purpose of this essay, I want to focus on the other part of the equation - not having to pay a mortgage anymore. That mortgage payment currently makes up about 30 - 40% of our monthly expenses.
The average American household spends $78,535 per year, or approximately $6,545 per month on total expenses.
Housing remains the largest expense category, consuming 33% of the average household budget.
What if we made a concerted effort as a society to make housing cheaper? That is very possible to do - but it would take a change in our society. We would need to see housing as more of a societal good that everyone should have - and less as an engine of an economy that needs to grow at all costs.
Our economy incentivizes the artificial scarcity of real estate
Artificial scarcity in residential real estate involves limiting the visibility of available units online, releasing them in small batches over time, or maintaining a percentage of vacant units to create a sense of urgency. This exploits the fear of missing out (FOMO), because we all need housing. This pressures tenants to accept higher offers quickly. Tactics include:
Selective online listings (e.g., showing only 5 out of 20 available units)
Waitlists for non-existent openings.
Strategic timing of unit releases to sustain demand pressure.
Technology like yield management software (Yardi, RealPage) can automate these tactics, adjusting prices based on perceived low inventory and sometimes increasing rents more than would a market with artificial scarcity.
Reports from Leasey.AI and ProPublica document that companies such as Greystar and AvalonBay Communities have used these tactics, with studies showing perceived scarcity can raise willingness-to-pay by 5–10% (www.leasey.ai). The Urban Institute also links scarcity perceptions to higher rental premiums.
Natural vs. Artificial Scarcity
The U.S. housing market already faces a structural shortage:
The National Association of Homebuilders (NAHB) estimates about 1.2 million additional units are needed to restore vacancy rates to historical norms.
Realtor.com puts the housing supply gap at nearly 4 million units in 2024.
A tight housing market along with artificial scarcity contributes to high rents and prices. Housing market supply will naturally wax and wane, but artificial scarcity is a deliberate, market-manipulative practice rather than a structural supply problem.
Share of U.S. Housing Owned by Investors
Corporate ownership of the housing supply isn’t helping. Institutional investors and private equity firms have increasingly bought up residential real estate in recent years, but they are not the primary reason there is less housing stock on the market. They are just exacerbating a problem that is already there.
A 2025 Lincoln Institute of Land Policy study found that about 8.9% of residential parcels in urban areas are owned by corporations, but this varies widely by location. In some cities like St. Louis, Baltimore, Miami, and Richmond, corporate ownership reaches 17–21%, and in Manhattan it exceeds 50%. The GAO found that in 2018–2024, institutional investors owned 1–3% of all single-family homes in six major metro areas, with the highest share (22%) in Jacksonville and the lowest (less than 1%) in Cincinnati and Seattle.
The closing off of the commons
The enclosure of real estate Commons - introducing artificial scarcity into the equation - began hundreds of years ago in Medieval England. In England, land enclosure was the process that ended traditional rights on common land formerly held in the open field system. Once enclosed, these land uses were restricted to the owner, and the land ceased to be for the use of commoners. The process of enclosure became a widespread feature of the English agricultural landscape during the 16th century. By the 19th century, unenclosed commons were few and far between. Today, they hardly exist at all.
My family lives out in the country a bit, about 20 - 30 minutes outside Charlottesville Virginia. Out where we live there are vast horse farms, cattle farms, wineries, and plenty of protected land that is set aside for conservation. There is plenty of land out there for the small college town nearby to be food independent and likely energy independent (wind and solar). But setting aside land for the community’s resilience would come at the expense of land prices and expose the lie of artificial scarcity.
There are plenty of spaces to live that are just empty.
We could use some of that rural land for housing, and local agriculture and local energy, but we don’t really need to touch that much of it. There is already an untapped housing resource staring us in the face - empty office buildings.
Jones Lang LaSalle (JLL) reports that over 20% of U.S. office space is vacant, equating to about 902 million square feet — roughly the size of 300 One World Trade Center buildings. The U.S. Government Accountability Office (GAO) estimates over 1.5 million abandoned properties nationwide, including commercial and residential. Many of these are underutilized office buildings.
You can’t convert office buildings into millions of spaces for housing overnight, but you can do it. We just aren’t trying very hard. I’ve lived in cities where old hospitals, old churches, and other unlikely places have been turned into housing. You can even live in some converted malls now.
But those places are still anomalies.
Degrowth is the answer.
We could have more affordable housing if we prioritized that as a society - but there is no money in it, so it doesn’t happen.
What is nice about not having a mortgage anymore is that our monthly expenses will significantly drop. We won’t have to work as much and as long to make ends meet and to save for retirement and education. We will have more time to spend with our families and in our community. We were very fortunate to have the means to pay off our mortgage early, so that we could live a more relaxed pace of life. The house we bought years ago was probably more expensive than it needed to be due to artificial scarcity.
If there was no artificial scarcity in the real estate market, we could have been in this place much sooner. So can everyone else.
If as a society, we stop chasing growth for no good reason, we could admit that we don’t need to make a fundamental human need of a place to live artificially scarce just to grow the wealth of a small fraction of society.
So, ask your local representatives why they aren’t converting those empty office buildings and that empty mall into housing. They won’t have good answers.
Give them one.
Matt, I totally agree and in spades. Housing affordability and availability is a primary human need just after food, water and clean air. It doesn’t get near enough attention in media and message. We need a revolution. It doesn’t need to be fancy just functional and with some basic amenities that appeal and soften the edges. Cooperatives with thoughtful supportive and collaborative policies could grow a feeling of community and exchange that would enhance human interaction and go a long way to relieve the atomization and mental/emotional health issues that plague the system of separation we have now,
Thank you for explaining how this false scarcity is inbred. How would the water systems be solved for kitchen and bath installation in office buildings and other vacant spaces. I guess that would tend to depend on the geographic locales. Out west there’s lots of low rainfall areas, but we still see expensive dingle home construction that’s both wasteful, resource expensive and imbalanced and encourages single car transportation and traffic.
you got the issue right on. There’s no profit in scaling back. We are heading into a period of extended economic contraction [recession] and many investments will have to be written off as sunk costs. But your right about the retool of some assts such as commercial real estate. Conversion to residential would provide great utility and it is probably the best way for lenders to minimize their loses.