The unbuildable American home

By Kevin Erdmann | National Review

The United States has developed a split housing market. There are cities where homes have become extremely expensive, and others where home prices have stayed low. Look at it from the perspective of a young family: In the expensive cities, it probably seems as though homes have been spectacular investments for their parents, but now housing is overpriced and makes for a poor investment. In the cheaper cities, it may appear as though their parents’ homes haven’t been such spectacular investments.

So, for those young families, the American dream seems to be a one-time asset bubble. Now it’s done, and all they have are poor choices.

It is tempting to try to address these incongruities with a targeted patchwork of solutions: rent control so families aren’t priced out of their neighborhoods, down-payment assistance to help new buyers in expensive markets, government watchdogs to make sure buyers aren’t overextended. 

The problem is, much of the stress and instability that we see in housing markets today is a result of a tangled web of existing barriers, taxes, and subsidies: This family gets a big income-tax write-off, and that family doesn’t. This family in one city rents a home for $4,000 per month, and that family in another pays $800 per month for a similar home. This family cannot meet the standards for mortgage approval and pays $1,200 in rent on a home owned by that family, whose mortgage costs only $700 per month.


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February 2020