Goldman Sachs isn’t quite sure

While the decennial census data are from the largest sample, we do not believe it is appropriate to ignore the other sources. …
With the 2010 Census results in hand, we would now say that excess vacancies in the housing market are 1.5 to 3.5 million units—a wide range, reflecting discrepancies in the available data.

Clearly though, the census results suggest the risks to our previous estimate of 3.5 million units are to the downside

If there are 2 million shadow households and 1.5 million excess housing units then we are as of right now, 500K units in the hole – should the market immediately clear today.

Even at the high end estimate of 3.5 million we are looking at an excess of only 1.5 million units and only roughly 200K new unit scheduled to come on line in the next 12 months. If housing starts remained depressed throughout 2012 then natural household formation will push us into shortage.

I do, however, think the high end estimate is too high and that when shadow households are factored in we are already looking at a shortage.

Expect higher rents over the near term and as a result higher core inflation. Those price increases, however, will reignite a building boom and support lots of new construction. We don’t want to over-react when it comes.