In the history of mankind housing has evolved to include structures of every conceivable shape. We have lived under trees, in caves, built hovels and established movable, nomadic cities in deserts and on prairie lands. But wait, there's more! Our home building skills have evolved to the point that certain countries have a surplus of houses; talk about nailing the technology.
Question? What century are we discussing? Was there ever, in the history of mankind, a housing surplus prior to financial engineering? Or is housing construction surpluses a modern economic happenstance exclusively. Historically, there have been several incidence of surplus housing. Most times had to do with disease wiping out huge portions of the in-place population. Or forced migration caused by war or famine.
In modern times surpluses are often caused by job dislocation- jobs moving from one metro to another metro (as when a large auto manufacturer relocates). Anyone following U.S. housing starts through the recession can identify the precipitous drop in new construction. I believe this lack of construction is playing out in the rental market today with higher rent growth, and will play out tomorrow with a shortage of available housing in 2014.
In a recent interview on Bloomberg Prof. Case (of the Case Shiller Index) stated that housing starts are now one third of the peak from when construction was adding over $600B to Gross Domestic Product (GDP). As the saying goes "its' hard to dig yourself out of a hole". The same applies to a soon-to-be shrinking housing stock.
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