The U.S. housing market is on fire, with the supply of available homes falling drastically short of pandemic-stoked demand. Worrywarts are calling it a “crisis” and circulating weird tales of buyer desperation — including one about a supplicant in Bethesda, Maryland who apparently offered to name her first-born child after a seller — and warnings of stunted recoveries. Or maybe the thing to fear is another speculative bubble, like the one that set off the 2008 global financial crisis.

The better way to think about the hot market is more prosaic: Demand for houses is booming as the pandemic recedes, and supply can’t keep up because of both temporary and longer-term factors.

Short-term causes notwithstanding, the imbalance is likely to persist. So states and localities should use it as an opportunity to rethink regulations that make it harder to expand the supply of housing.  

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