Shut Out: How a Housing Shortage Caused the Great Recession and Crippled Our Economy

The US suffers from a shortage of well-placed homes, which has been largely caused by the constrained housing supply in a handful of magnet cities leading the new economy. This has led to a spike of migration away from the magnet cities among households with moderate and lower incomes, causing a brief contagion of high prices. Shut Out provides a much-needed correction to the causes and consequences of financial crises and secular stagnation.

Format: Paperback / softback
Length: 322 pages
Publication date: 15 September 2021
Publisher: Rowman & Littlefield

The United States faces a severe shortage of well-located homes, a problem that persisted even during the peak of the housing boom in 2005. This issue is not limited to the US; it is also prevalent in leading countries worldwide. In his book, Shut Out, author Kevin Erdmann argues that the housing bubble, which peaked in 2005, should be more accurately described as a refugee crisis rather than a credit bubble. The surge in demand for limited urban housing led to a wave of migration away from magnet cities among households with moderate and lower incomes, who could no longer afford to remain. This migration triggered a brief contagion of high prices in the cities where the migrants moved.

Erdmann observes that the housing bubble has been widely and incorrectly attributed to various "excesses." Policymakers and economists believed that the primary challenge was that we had built too many homes. However, Erdmann argues that this misdiagnosis of the problem led to misguided public policies, which were the primary cause of the subsequent financial crisis. A sense of moral panic about supposed excesses in home lending and construction led to destabilizing monetary and regulatory decisions. As the economy slumped, a sense of fatalism prevented the government from responding appropriately to the worsening situation.

Shut Out provides a much-needed correction to the causes and consequences of financial crises and secular stagnation. Erdmann argues that the housing shortage is not just a problem in the US but a global phenomenon. He suggests that policymakers should focus on increasing the supply of affordable housing and promoting urban development to address this issue. Additionally, he emphasizes the importance of addressing income inequality and promoting social mobility to ensure that everyone has access to a decent home.

In conclusion, Shut Out is a thought-provoking book that challenges the conventional understanding of the housing bubble and its consequences. Erdmann's analysis provides a much-needed correction to the causes and consequences of financial crises and secular stagnation. By focusing on the housing shortage and its global implications, he offers a roadmap for policymakers to address this issue and create a more equitable and sustainable future.

Weight: 466g
Dimension: 151 x 228 x 22 (mm)
ISBN-13: 9781538163009