Brick by brick, regulation by regulation, America built its own housing crisis.
Experts say the problem is entrenched in the foundation of America’s housing system, a design flaw decades in the making.
They point to three major forces doing the most damage: restrictive zoning, land-use barriers and financial policies that have choked supply and pushed prices out of reach.
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“There are a lot of ways to halt and stop development,” said Joseph Gyourko, a professor of real estate and finance at the Wharton School of the University of Pennsylvania.
“And we’ve gotten really good at it in the United States.”
Experts say regulations and red tape are stifling supply and driving up home prices across America. (Matthew Busch/Bloomberg/Getty Images)
That resistance to new construction, experts say, is why restrictive zoning and regulatory barriers top the list of forces driving the U.S. economy. housing crisis.
Jim Tobin, president and CEO of the National Association of Home Builders, said the cost of regulations alone plays a major role in housing affordability.
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The Trump administration has faced mounting pressure over the nation’s worsening housing affordability crisis. (Mario Tama/Getty Images)
He said some local governments are deliberately limiting growth, adding both time and cost to the process.
“Sometimes there are communities that are just regulating because they want to stunt growth, they don’t want more houses to be built,” he said.
And the longer builders wait, Tobin added, the more expensive those projects become.
“Time is money in real estate,” he said. “You own the land, you pay taxes and while you wait for local approvals the costs continue to rise. Many communities then require developers to install sewer, water, roads and electricity. infrastructure and all of that is included in the final price of the house.”
Economists say increasing housing supply is key to improving affordability. (David Paul Morris/Bloomberg/Getty Images)
The rising costs for builders, economists say, ultimately price out buyers and hinder new construction.
EJ Antoni, chief economist at the Heritage Foundation, said the US housing market will only recover when construction becomes easier and financing costs decrease.
“The best way to thaw this frozen housing market,” he said, is to cut government spending to ease interest rate pressure and reverse troublesome interest rates. regulations.
He added that such steps would “in turn increase the production of new homes.”
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Economists and builders warn that the bigger danger lies not just in rising prices, but also in what prolonged unaffordability could mean for the next generation of homebuyers.
“The more we delay ownership, the later we delay wealth creation in this country,” Tobin said. “And that’s the challenge everyone is facing right now.”
