[bryanlarsen]

And the massive price drops of 2008 signaled that supply exceeded demand and that builders should stop building.

And they did.

Price signals were wrong, we should have kept building.

P.S. Canada did not have massive price drops in 2008, and did not stop building. Canada builds a lot more housing per capita than the US, but Canada also has substantially more immigration per capita than the US so Canada's problems are primarily demand side rather than the primarily supply side problems the US sees.

[TulliusCicero]

It's definitely harder to analyze building for people actually buying homes vs renting, simply because buying property is susceptible to bubbles in a way that doesn't happen for people renting. People don't go irrationally beyond their means for rentals in the hope that the rental will appreciate in value in the long run and they'll be able to "hold onto it", because it's a rental.

Something similar happened to Spain recently, where there was a huge building bubble before (real estate was an insane % of the economy IIRC) and now they're not building enough.