President Donald Trump recently issued an executive order calling for action to address the “cost of living crisis,” highlighting high housing costs as a major challenge. This major affordability crisis continues to put the American dream of home ownership beyond reach for many across the country. Even with good-paying jobs, many people struggle to afford a home in the current housing market.
Throughout America’s history, policymakers have created program after program to help people struggling to find a place to live. This is a noble goal. After all, housing is a basic human need. But each time the government gets involved in housing markets, it does more harm than good.
For example, in the 1930s, the federal government funded and constructed large public housing projects in Atlanta, Chicago, and other major cities. These projects helped to entrench segregation across cities, concentrating low-income black residents in areas with little economic opportunity and high rates of crime. Although most public housing projects have been demolished, those that remain continue to have higher rates of poverty and earn poor grades for maintenance and unsafe living conditions.
Today, policymakers often propose quick fixes, such as federal tax incentives for home purchases or state and local governments mandating that a certain proportion of new housing developments be “affordable” to median or low-income residents. But mandating something doesn’t make it so.
New research we produced at the Pacific Legal Foundation shows that reforms are needed to restore property rights and unlock America’s missing housing supply.
Economic research is abundantly clear — home prices are high because America has not built enough homes to keep up with basic population growth since the housing crash of 2008. As a result, America has a shortage of 6.5 million homes.
Both economists and average people know that high prices for any product provide a market signal that we need more of something. Why, then, don’t builders build more homes? Because local governments have made it incredibly difficult and expensive to build new homes in America, especially where they are needed most. Land use restrictions create limits on the right to use your property and, when you do get to use it, limits on what you can do with it. These restrictions impose limits on supply and have made housing scarce.
Land use regulations drive up the costs of building or block building altogether. Research shows a strong correlation between stricter land use regulations and higher home prices. As a result, families in the most-regulated cities are less likely to be able to afford an average-priced home in their area.
Housing scholar Emily Hamilton shows that “inclusionary zoning,” what the government euphemistically calls forcing builders to offer new housing below its market price, actually does the opposite of what it’s intended to do by acting as a tax on building new housing. While a few lucky residents, those who get to live in the artificially below-market units, benefit, the overall effect is to make it more difficult and expensive to build more homes. This is the exact opposite of what the country needs to solve the problem of high housing costs.
One alternative to artificially lower-priced housing is government-subsidized housing. Housing vouchers allow residents to choose where to live rather than trapping them in poorly maintained government housing. But vouchers and proposals to provide tax credits to first-time homebuyers are no better at addressing the problem, because they boost demand without increasing supply. However well-intentioned, these demand-side policies don’t address the root of the problem — we don’t have enough homes.
Instead of band-aid policies that boost demand, do nothing to increase supply, and mess with the market, the solution lies in restoring our most basic constitutionally guaranteed rights — the right to reasonable use of our own property. State-level policy reforms that help restore property rights are the most underrated path to unlocking America’s missing housing supply.
States have the power to unleash new housing by adopting land use policies that simplify, speed up, and provide certainty in the building permit process. For example, “by-right development” guarantees that projects that meet local ordinances will be approved as a matter of right, reducing unnecessary delays caused by discretionary review. One study found that this process sped up the permitting process by 28% compared to projects that went through discretionary review.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Another promising reform is to require permitting decisions to be made within 60 days, giving project developers the right to build, amend, or appeal their applications. This would help rescue the many projects that get stuck in permitting limbo. A 2022 study of counties in Washington state found an average permitting delay of 6 1/2 months, adding over $30,000 to the cost of each home. These delays and costs are entirely the fabrication of the government. The good news is they are entirely avoidable.
The housing crisis will not be addressed unless we allow people to build more housing where it is needed most. Good intentions won’t build more homes. Reforms that make building easier are the best path toward an America where everyone has a place to live.
Megan Jenkins is the strategic research director at the Pacific Legal Foundation, a public interest law firm that defends Americans’ liberty against government overreach and abuse.