We are Not Building Enough Homes. That is the Whole Problem.

I talk about interest rates constantly in my work. In all honesty, however, rates are not the deepest reason housing is unaffordable. The deeper reason is that we simply have not built enough homes and we have not for a long time.

A New York Times newsletter piece from earlier this year put it plainly: housing starts are still running well below what is needed to meet demand. The shortage is not a recent problem. It is been building for decades and it is the main reason prices have not come down even as rates have risen.

Inspired by: The New York Times, February 25, 2026

The Supply Problem in Plain Terms

For most of the 2010s, builders were still recovering from the 2008 crash. They were gun-shy, financing was tight and construction slowed dramatically. Meanwhile, population kept growing and household formation kept happening. The gap between how many homes existed and how many were needed quietly widened every year.

Then the pandemic hit, demand surged and everyone finally noticed the shortage. Prices jumped almost 50% in two years. The Federal Reserve raised rates aggressively to cool inflation, which did slow buyer demand but it also slowed new construction, because builders borrow money too and higher rates made development more expensive.

The result: inventory is still low, prices are still high and rates are still elevated. Three problems hitting at once.

California Is Worse Than Most

Every state has a housing shortage to some degree but California's is severe. Zoning restrictions, lengthy permitting processes, high construction costs and community resistance to new development have made building here extraordinarily difficult. The state has made some legislative progress in recent years, streamlining ADU construction and limiting local veto power over some developments but these are incremental steps against a very large deficit.

Orange County in particular has almost no undeveloped land left at this point. New supply is mostly infill and adaptive reuse. It is slow and expensive by nature.

What This Means If You are Trying to Buy

I am not trying to depress you. It is important to be realistic, however: there is no cavalry coming to rescue home prices here. The supply problem does not get fixed in a year or two. If you are waiting for prices to come down significantly in Southern California, you will probably wait a long time.

What that means practically:

1. If you can afford to buy today, buying today probably makes more sense than waiting for conditions that may not come.
2. New construction is worth looking at, especially further inland. Builders are sometimes offering rate buydowns and incentives that can get you into a lower effective rate than the resale market.
3. If you genuinely cannot afford to buy right now, the right move is to build your savings and get pre-approved so you are ready when you can. Not to wait and hope the market fixes itself.

Happy to talk through your situation and run realistic numbers with you. That is always free.

Rates shown are for illustrative purposes only and are not a commitment to lend. Actual rates depend on credit profile, loan type, property type and market conditions. Not all borrowers will qualify.