Shut Out

Kevin Erdmann was a small business owner for 17 years. In 2010, he sold his business and earned his master’s degree in finance from the University of Arizona, which grounded his real-world experience of investing in the rigor of the academy.In 2013, he began blogging at idiosyncraticwhisk.com to share his contrarian observations about investment strategies and research. He was surprised to uncover evidence that seemed to contradict conventional narrative and common assumptions about the housing bubble and the financial crisis. As the evidence accumulated, he developed a new account of the causes of the housing bubble and financial crisis. That account eventually became a two-book project, Shut Out and a follow-up book still in development, both of which synthesize and expand on the housing theories he originally published on his blog.He lives in Gilbert, Arizona, with his wife and three children.

• Introduction 1Part I: The ThingsWe Didn’tKnow and the ThingsWe KnewThat Just Weren’tSoChapter 1: High Home Prices Are Caused by Limited Supply 13Chapter 2: Our Unexceptional Bubble43Chapter 3: A Tale of Credit 67Part II: What ReallyHappenedChapter 4: How Rising Prices Cause More Rising Prices 91Chapter 5: Migration and Contagion Cities 109Part III: Symptoms of the Urban Housing ShortageChapter 6: Closed Access to Labor139Chapter 7: Broader Economic Implicationsof Closed Access Cities 149Chapter 8: Closed Access and International Trade 181Chapter 9: A Moral Panic and a Financial Crisis 199Epilogue 221Appendix: Home Prices 243Notes 273About the Author 307Acknowledgments 307

“Kevin Erdmann has put forward the radical thesis that restrictions on housing supply have been at the center of America’s macroeconomic dilemmas, in addition to raising the cost of living for ordinary Americans. This is one of the few truly new ideas in the debate over the Great Recession. While I still am not sure how much I agree, I find myself thinking about Kevin’s ideas often, and they grow on my mind. Kevin has poured his heart and soul into making the case in this fascinating new book.”