Every time I’ve sat down with economists over the past few months, we have lamented the dismal state of the housing policy discussion. Against stiff competition, it is easily the most poorly informed policy debate in America. Maybe a few facts will help.

The first matter to consider is that we’re on the flip side of the most acute economic interruption of modern times; the COVID pandemic. In a matter of weeks, we experienced Great Depression rates of job losses, across the globe. Then, most of these jobs came roaring back. Millions of Americans retired earlier than planned, and 44 million American workers found themselves working remotely, half of them full time. These events all changed future housing plans.

At the same time, mortgage rates plummeted, just as tens of millions of Americans wished to relocate. COVID virtually stopped home construction in early 2020, and supply chain disruptions further reduced new construction thereafter. All these factors drove up prices in almost every housing market.

All of this is transient disequilibrium. It is not a crisis, and it will pass without any government intervention. Home prices are already in retreat and new home construction is planned for next year across much of the country. Across the nation, there are empty office buildings in every major city, offering the opportunity for residential conversion. And, population loss in major cities has prompted broad review of restrictions on new housing. Markets work, and housing markets work better than most.

Second, for the past 50 years, we’ve been building homes at about the same rate the population has risen. However, we’ve been eliminating older homes at a tiny pace. That means today there are some 16 million unoccupied homes in the U.S., or more than 11 percent of the full housing stock. Indiana’s share of unoccupied homes are close to 300,000. That is sufficient to fully house all the growth of population in our state so far this century.

These Census counts of homes do not include those that appear damaged or unlivable. And, as with any Census estimate, the number may be off a few percent, high or low. But, any housing discussion that ignores the actual Census housing data is a waste of time. Any policy debate that ignores this data is negligent. Too often, we look only at Multiple Listing Service (MLS) data provided by realtors. This is superb data for everything, except for understanding housing supply. For that it is nearly worthless.

The problem is that this glut of homes is located in the places that people don’t wish to live. These don’t make it into the MLS listings, because neither the owner nor realtor are willing to pay the cost of listing. That has nothing to do with the quality of the home, or its level of disrepair. Realtors and owners don’t waste time trying to sell homes in many neighborhoods. Most of the 300,000 vacant homes in Indiana that don’t make it into the MLS would sell for several hundred thousand dollars if they could only be moved to Chicago, Boston or Albuquerque.

For these homes, we don’t have a housing problem, we have a neighborhood problem. That is the single most important thing to understand in all this debate. The reason new homes aren’t being built in much of the Midwest is because a new home cannot sell for the cost of construction. This isn’t an abstract problem. There are more than a million homes in Indiana alone that’d be worth more disassembled and stacked on a rail car than they are currently assembled in the towns in which they’re located.

Subsidizing new homes construction in a community with declining population won’t fix the neighborhood problem. Thus, it won’t increase population. In fact, it is almost certain to worsen the situation by further depressing the price of surrounding homes. I dislike being so flippant, but this is the sort of thing we cover in high school economics. Just to be clear, I’m talking about the 200 or so Midwest counties that are shrinking, or the 60 or so Hoosier counties that are in decline. Growing communities have a different problem.

Looking beyond the COVID disruption is difficult. Still, places that are growing have housing challenges that differ greatly from places in decline. The counties that are in between probably have a bit of both problems, as do large cities like Indianapolis, Cleveland or Milwaukee.

The Midwest doesn’t have the types of housing restrictions that have clobbered San Francisco, Seattle, New York or Portland. Faddish urban growth boundaries and building limits are in the process of being rolled back in these places. It is easy for fast-growing cities to slip in accidental growth restrictions that generate long-term problems.

The easiest of these is to simply ignore the need for different types of housing. Midwestern cities with large numbers of single-family homes are thriving, much to the chagrin of many urban planners. But, thriving suburban type communities also need housing of mixed type. This means some apartments and duplexes, as well as starter homes. This is delicate balance, of course. Still, my rule of thumb is that if a local police officer and school teacher cannot make a life together in your city because of housing costs, you have a problem.

There is much legitimate concern about the plight of low-income renters. These are the folks most likely to face a real budget crunch when we have home price spikes like we just experienced. However, this is not technically a housing issue. Low-income families have few housing choices because they are low income, not because there are few housing choices. In these cases, the problem is either in labor markets or in educational attainment. Trying to fix these problems through housing markets might offer temporary relief, but it won’t solve the underlying problem.

There are also frequently voiced concerns about the gentrification of neighborhoods currently occupied by low-income families. I find this argument to be appallingly incoherent. Thriving cities go through change, and attractive neighborhoods appreciate in value, while unattractive ones decline in value. There’s almost no better source of wealth for poor people than by owning an appreciating home. Arguably, the fastest path to growing intergenerational wealth would be through gentrification.

The simple fact is that housing markets in the Midwest operate smoothly and efficiently. The ‘housing crisis’ that so many folks talk about is largely non-existent, or at least massively overblown. Housing availability is only a symptom. When you hear someone say there’s a housing crisis or housing shortage, they are mistaken. What they should really say is that there is a neighborhood problem that starts with a lack of quality schools and public safety. Not housing.