It can't explain shortages.

If the price of one thing increases relative to the price of everything else (including the price of labor, i.e., how much you get paid) that cannot directly be explained by a money supply change. A shortage being caused by something else is a much simpler explanation.

True, shortages can be caused by a number of circumstances, including housing supply vs. demand. That said, approximately 2 Trillion of the 3 Trillion increase in the Fed's balance sheet over the last decade went to purchases of Mortgage Backed Securities (MBS). This had multiple effects, including: 1) boosting real estate prices by putting the Fed's fresh capital in competition with wage earners for real estate, and 2) supplying banks with 2T in capital that they could use for other purposes, for example VC investments in Silicon Valley. It's not just that the money supply increased; it's that the increase was targeted at house prices.

A shortage is supply vs. demand by definition.

Shouldn't real estate developers be able to make even more money on top of this by increasing the housing supply? Wouldn't the "banks" have cheap loans for real estate developers? This can't explain a shortage.

> A shortage is supply vs. demand by definition.

Capital dollars (from VC's) are easier to come by in SV than wage dollars. You prefer to think of the shortage as one of houses. I ask you to consider the idea that it is a shortage of wage dollars.

What do you call shortages in this context?

Simple shock to demand can create shortages if supply is inelastic(which it is on RE in general due to the length to put a unit on the market, and it is so in San Francisco with its constrained supply)