Under market prices means queues for them. Credit - Lizzie via Wikipedia

We should add the housing charity Shelter to the list of dunderheads failing to understand the most basic things about our universe. If you fix the price of something below the market clearing price then the market will not clear. That’s obvious enough, isn’t it? But it’s apparently too, too, complex for the snowflakes over at Shelter:

One year on from the tragic Grenfell fire and many survivors are still waiting for a new home but new analysis from Shelter reveals the situation is similarly stark right across the country.

Over 1 million households in need of a social home are stuck on long waiting lists, often for years on end. Yet the number of social homes becoming available is extremely low leading to a huge gap.

Shelter’s analysis shows there are 1.15m households on waiting lists but only 290,000 social homes were made available last year, a difference of more than 800,000 homes.

The gap is caused by a lack of new social homes being built and the fact many existing homes are sold off through right-to-buy without the receipts being used to replace these homes, like-for-like.

No, this isn’t being caused by selling stuff off. It’s caused by setting the price of social housing below the market clearing price. This means that more people want one than there is supply to offer them. This is what always happens when prices are below the market clearing ones. This also isn’t some oddity, it’s definitional.

Think back to those first couple of pages of any and every economics book. Those two little curves, supply and demand. With the market price being determined by where they cross. Now, decide that you’re going to fix that price below that market clearing price, the one where everyone who wants one at that price can get one. What happens? We’ve just reduced the number of people who wish to supply whatever it is and increased the number who desire one, haven’t we? That is, we’ve created a shortage.

What is it we do with social housing? We fix the price below the market clearing price. That’s rather the point of them in the first place, social houses, that they be cheaper than the market. So, what does that mean? It means we’ve just increased the demand for those social houses and we’ve created a queue of people who want one. If social rents were market rents then no one would be lining up to get such a tenancy, would they?

Again, note that this happens whenever we set a price below the market clearing price. What are we specifically and deliberately doing with social housing? Setting the price below the market one. Thus queues for social housing are normal, they’re part of the very system we’re using.

If only the people trying to rule our world understood how it worked, eh?

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  1. And the solution is to build lots of homes of a sort people want and in places people want to live, hence the market price for housing comes down, probably to less than the current price for social housing.
    Pain for people who already own a house of course, which is why it won’t happen. But for me I’d rather see my grandchildren in their own place while I’m alive than leave them the means when I die- and I don’t really want to move.

  2. In the States “affordable housing” is largely a program to direct a handful of young people (largely minorities these days) into dense apartments near the tracks while ultimately pressuring more to leave the area. Those “lucky” enough to snag a cheap apartment will never make anything in equity appreciations and thus most will never be able to afford to move into nice neighbourhoods. Meanwhile, those of us who own houses (disproportionately white) make a fortune on home equity, and we’ll leave something to the kids and grandkids, whereas those in the affordable housing won’t leave so much, more or less assuring that most will continue to live by the tracks. It’s actually pretty effective – get rich, keep minorities out of your neighborhood, and feel virtuous about demanding affordable housing all at the same time. That goes a long ways toward explaining why this is promoted so heavily.

    • Poor TD obviously never heard of subprime mortgages. The White Guilt is too, too heart-rending for words. I live in a genuine multiracial country with a black majority. Ours is one of only three white households on the block, in a reasonably prosperous suburb. That’s typical throughout the “better” suburbs. The wrong side of the tracks is overwhelmingly black, that’s true. But that, my dear whiny TD, is how life works. You learn, you get a job, you work hard and stick to it, and in time you acquire a certain amount of wealth. There’s no racial bias to the system (actually there is in my country, but we whites are always free to emigrate if we don’t like it).

      • You’re somewhere in the south where they actually build single family homes? My comment pertains to areas, such as the San Francisco area, where they’ve pretty well stopped building them. I suspect I live and work in as diverse an environment as anyone here. I do see, however, what the “planners” are actually accomplishing, and it is as I describe.

        Interestingly, in California the number of blacks is about the same today as it was in 1990, even though the state’s population has grown by more than a quarter and the black population in the US is growing faster than the white population. They are leaving the state because housing costs are driving them out.

        You should get out more.

  3. The term “social housing” is amusing, in the same way as prepending “social” to any word including Justice and Work. Presumably it is not the American “group home,” in which many of your neighbors pretend during every waking moment that they are radio presenters; but rather Give-away Housing. What does anyone expect but long queues?

    Shelter’s link of this report to the Tragic Fire is gratuitous. It provides the example of Freddy the Engineer, who is “privately renting” (in other words, solving the problem) but has been in the queue for 18 years. (It is poor Engineering not to see that this isn’t a solution.) Freddy states that, “I feel that I should be helped by the council.” Because, at this point in his life, “I should be…relaxing in the job that I’ve been doing for a long time.” Funny, none of us in the Productive Sector relax in the job, nor are doing what we were doing a long time ago. Freddy the Engineer wants stasis. (And freebies.) Shelter advise that more “case studies” plus (heart-rending) photos are available on request.

    Agree with Pat that this racket serves to inflate the value of the estate of a large percentage of voters, even if it has to use weasel words like “wetlands” and “heritage,” and thus is unlikely to change.

  4. What Pat said, in Spades.

    I often wonder how often these lists are purged and how well those on them are vetted. My father put me on the waiting list in Shipley when I was born, nearly 62 years ago.

    Amd what about those on social housing, do they still need it? I have a nephew and niece who live in social housing in Stevenage and lat time I was there the roads were cluttered with BMWs, Mercs and other assorted luxury vehicles.

    • I used to walk through the social housing at the north of my parents’ house to catch the bus to school. Most of the cars which I passed were much better than my parents had. Well, until my Gran died …