For those who have heard the news that US housing starts are down 4.1% over the past two months of 2021, your first thought might be, "What is a housing start?"

Simply put, a housing start is the construction of a new housing development on previously undeveloped land.

This might seem like a trite statistic on its face, until, of course, you realize that the entirety of America's residential system was constructed exactly like this.

Either private builders or government contractors would take land and start building residential communities on it.

This is far more involved than just erecting a few houses on top of the ground. It's also about digging in the sewage lines and connecting water and power to the nearest municipality. It's about creating roads, and in some cases parks and gardens and more.

Everything that is "America" to most people is the fruition of countless housing starts. That they're down so tremendously is a bad sign.

When these numbers fell in 2020, everyone knew to blame it on the virus (or on Donald Trump). It seems like a lifetime ago now, but this is when the American mainstream corporate media actually told stories about the struggles to find adequate housing in the nation.

Since Joe Biden took office last year, these stories have disappeared. The average American can look out at the country and see that mask mandates are all but gone, schools and businesses are open, and COVID cases are going down.

So, they ask, why aren't new houses being built? It's simple enough to explain, though the reasons are actually pretty varied.

Not Every State is the Same

The first reason that housing starts are down is that these numbers are taken as an aggregate juxtaposed against the demand for housing at large.

So, for instance, if a state like Arkansas has built 1,000 new houses, but the need for housing in a state like Washington is 1,000, you can see that these numbers cancel each other out in the aggregate.

It's just the way the numbers are compiled, and it highlights the fact that not every state is the same.

States like the Dakotas and Oklahoma, for instance, don't have enough demand for housing to need to build any housing. States like Florida do have the demand, and they are building the houses. Then you run into states like New York, for example, that do have the demand, but whose COVID restrictions are still going at 100% in terms of this type of construction.

So, what you end up with is a nationwide aggregate that's down 4.1% this year, which means its getting worse than it was. All told, American housing starts are down over 40% since 2020. 4.1% is just this year.

A Mass Exodus is Noticed by the Market

Even if a state like California wasn't still so wrapped up in COVID restrictions (outside of the Super Bowl), the fact is that they likely wouldn't be building any houses.

This is because California is losing over 10,000 people per month. The mass exodus in California is so bad that the famous U-Haul company doesn't have any more trucks to rent out, and all their competitors are also completely bereft trucks to rent.

People are fleeing the state in droves, and unless it's going to be the government building the housing, the private sector just sees no upside of building in the state, especially once you include the higher tax rates, increased regulations, and inflated costs of materials.

Current Government Scares Investors

Speaking of regulations, the current government in America is scaring private investors.

The fact is that the American government under President Joe Biden now has the ultimate authority to tell companies to completely shut down for any reason. These are powers that western governments never had before.

This can be seen in Canada, where truckers have been ruled terrorists and their bank accounts have been seized and frozen, along with their digital currency wallets.

The point here is that governments have increased their powers to levels most people never thought possible.

Why bother investing millions of dollars into something if you can be crushed like a bug the first time a social media post goes viral or CNN needs a cheap headline?

Most investors simply view housing as just too risky in terms of building.

The end result is that there are bidding wars on current houses, and hardly no new houses being built. This is something that's going to end up creating a housing market much worse than 2008 unless something gives.