Rising Cost of Housing and Shortage

This exercise is meant to give you experience in applying the material we have used in the course. It is NOT a research paper. Rather, I’m giving you a list of articles which give a pretty thorough coverage of the issue. YOUR job is to use the economic models we have developed in the course to analyze the source of the problem and explain and assess the proposed solutions.

THE GREAT HOUSING SHORTAGE AND THE RISING COST OF HOUSING

Recently DCist, a blog published by a local university about local issues in Washington DC ran a story called “Renting In And Around D.C. Is Hellacious Right Now. Just Ask Your Neighbors.” The article describes the difficulty of finding an (expensive!) apartment in Washinton DC.

But the housing shortage and affordability problem is not restricted to DC. Many cities and regions throughout the U.S. have similar issues: too little housing and high housing costs. Your job is to use the economic tools we have studied in this course to show what is happening and demonstrate how proposed solutions would attack the problem.

THE PAPER

Your paper on the housing problem should be 5-7 pages in length. It should have a written body of text and an appendix where you include supply and demand diagrams illustrating economic theory.

The content of your paper should include the following:
I. A description of the problems in the housing market and their sources (2-3 written pages, not including diagrams)

In the body of the text, you should explain the problem and select at least two of the causes for the housing shortage/affordability problem as described in the attached articles. When you cite facts from an article (like statistics) you should cite your source in Chicago format (described below).

You also should demonstrate how economic models explain what is happening by drawing the appropriate supply and demand diagram (if you want to use an economic graph other than the supply diagram you need to discuss this with the professor), with a label (that is, something like “Figure 1: trends in market equilibrium in the housing market”), and a verbal explanation in the body of the text on what is happening in the graph. (“As we can see in Figure 1…”). Graphs can be hand drawn, with screenshots inserted into your paper if they are neat, clear, and readable. Please note that discussing economic theory and using diagrams to illustrate it is a requirement for the paper!

You can also graph statistics (like the trend in housing production over some period) in the appendix if you want.

You’ll find that the articles discuss both rental and owner-occupied housing. Feel free to limit yourself to one of these if you find it easier to craft your arguments.

II. The proposed solutions (2-3 written pages, not including graphs)
In the body of the text you should also describe at least two possible solutions to the housing shortage/affordability problem. These can be solutions that you think will work, or proposed solutions that you think will not work (hint: review the unit on price ceilings and floors).
Once again, you should use supply and demand diagrams to show the impact of the proposed solutions on the housing market and how they might or might not help solve the problem (if you want to use an economic graph other than the supply diagram you need to discuss this with the professor). These diagrams should also be included in the appendix. A written explanation of the theory in the graphs should be included in the main body of the text. (“As we can see in Figure 2….”)
III. An appendix with economic theory graphs
Include all your theory graphs and any statistical tables or charts in the appendix, appropriately labeled (That is, Figure 1, Figure 2, etc.)
IV. A bibliography showing the works you read and cited, with Chicago Style citations.
(here’s a link showing how to use Chicago style citations, both in the text and in the bibliography

https:/www.chicagomanualofstyle.org/tools_citationguide/citation-guide-2.html

(You’ll be using the newspaper/periodical and internet postings type of citations)

Rubric/Grading Scheme

Quality of explanation of the two problems
• 1) Factual presentation of the problem 15 pts
• 2) Written explanation of theory in the text 10 pts
• 3) Graphical Explanation of theory in the appendix 15 pts
Quality of Explanation of the Proposed solutions
• 4) Factual presentation 15 pts
• 5) Explanation of theory in text 10 pts
• 6) explanation of theory in graphical appendix 15 pts
7) General Quality of writing (spelling, grammar, etc.) 10 pts
8) Correct paper format 5 pts
9) Correctly formatted citations 5 pts

Total 100 pts

BIBLIOGRAPHY

This is not intended to be a research paper. By relying on the following sources, you should be able to get the information you need to complete the project (you can do extra research if you want, but it’s not necessary to write a good paper.)

You don’t have to read everything to write a good paper, but of course, the more you read the better your understanding will be.

Badger, Emily. (2023) “American Cities Have a Conversion Problem, and It’s Not Just Offices.” The New York Times, July 1, 2023.
https://www.nytimes.com/2023/07/01/upshot/american-cities-office-conversion.html?action=click&module=Well&pgtype=Homepage&section=The%20Upshot

https://montgomerycollege.idm.oclc.org/login?url=https://www.proquest.com/blogs-podcasts-websites/american-cities-have-conversion-problem-s-not/docview/2831727889/se-2?accountid=39773

Bahney, Anna . (2023) “The US housing market is short 6.5 million homes.” CNN Business, March 8, 2023
https://www.cnn.com/2023/03/08/homes/housing-shortage/index.html

Bipartisan Policy Center. Getting Serious About Housing Supply Series
https://bipartisanpolicy.org/getting-serious-about-housing-supply-series/
(note: this is a series of webinars)

Chang, Alvin. (2023) “How finding a home in America became so absurdly expensive.” The Guardian, May 10, 2023.
https://www.t heguardian.com/us-news/2023/may/10/us-housing-market-prices-increasing

Cohen, Rachel M. (2023) “The big, neglected problem that should be Biden’s top priority.” Vox, March 1, 2023.
https://www.vox.com/policy/23595421/biden-affordable-housing-shortage-supply

Demsas, Jerusalem. (2023) “Meet the Latest Housing-Crisis Scapegoat.” The Atlantic, January 26, 2023.
https://www.theatlantic.com/ideas/archive/2023/01/housing-crisis-hedge-funds-private-equity-scapegoat/672839/
(note: The Atlantic has a paywall, but allows a limited number of free articles)

Friedersdorf, Conor. (2022) “The Case for Building More Housing.” The Atlantic, November 23, 2022.
https://www.theatlantic.com/newsletters/archive/2022/11/the-case-for-building-more-housing/672263/

Khan, Ashfaq. (2022) “The Rental Housing Crisis Is a Supply Problem That Needs Supply Solutions.” Center for American Progress, August 22, 2022.
https://www.americanprogress.org/article/the-rental-housing-crisis-is-a-supply-problem-that-needs-supply-solutions/

Khater, Sam et al., (2021) “Housing Supply: A Growing Deficit.” Freddie Mac Research Note, May 7, 2021.
https://www.freddiemac.com/research/insight/20210507-housing-supply
(Note: the authors of this article are economists and Freddie Mac is a government agency that helps finance mortgages)

Lowrey, Annie. “The U.S. Needs More Housing Than Almost Anyone Can Imagine.” The Atlantic, November 21, 2022
https://www.theatlantic.com/ideas/archive/2022/11/us-housing-gap-cost-affordability-big-cities/672184/

McPhillips, Tim. (2022) “5 reasons housing is so expensive right now.” PMBS News Hour, Aug. 5, 2022.
https://www.pbs.org/newshour/nation/5-reasons-housing-is-so-expensive-right-now

Christina Plerhoples, et al., Land-Use Reforms and Housing Costs, The Urban Institute. March 29, 2023
https://www.urban.org/research/publication/land-use-reforms-and-housing-costs
(note: this article uses some advanced statistics, so it may be very advanced for many of you)

Yglesias, Mathew. (2015) “Everything you need to know about the affordable housing debate.” Vox, May 11, 2015.
https://www.vox.com/2014/4/10/18076868/affordable-housing-explained