Lawmakers Look in All the Wrong Places for Answers to High Home Costs

The United States faces a major public policy challenge: housing affordability, which has a simple solution. Polls show Americans rank high housing costs just behind inflation as a top concern. Despite radical ideas from lawmakers, the answer is straightforward economics: build more housing. For over a decade, new household formation has outpaced home construction, leading to a shortfall of 6.5 million homes. Instead of addressing construction, lawmakers have blamed short-term rentals, algorithms, Wall Street, landlords, and immigrants. These diversions have failed. New York City’s strict short-term rental regulations, for instance, haven’t reduced housing prices. Conversely, cities like Dallas and Washington D.C., without such restrictions, have seen home prices fall or stabilize. Research shows that short-term rental bans have minimal impact on housing prices and can benefit local tourist economies. Nonetheless, lawmakers persist with these ineffective measures, as seen in Hawaii, where a recent ban overlooks the true issue: limited construction. Austin, Texas, offers a solution. By issuing over 30,000 building permits in 2023, Austin reduced home prices by 11 percent. The key is to increase housing supply by removing regulatory barriers like single-family zoning and parking minimums. In an election year, candidates may point fingers, but voters need real solutions. Closing the gap between new households and housing construction is crucial. Increasing the housing supply is the effective way to address the crisis and lower costs.