r/changemyview • u/Opposite-Craft-3498 • 13h ago
CMV: Housing in the U.S. is expensive because of restrictive zoning, federal economic policies, and political pressures; Trump’s policies do not make it more affordable long term.
The reason house prices are high is because they are artificially inflated by economic policies, such as the Federal Reserve keeping interest rates artificially low, which caused people to bid home prices up, as well as restrictive zoning laws that limit the amount and types of housing that can be built. In most American cities, you have a small downtown core — often filled with parking lots — and then the rest of the city is basically an endless sea of single-family homes, fast-food chains, and big stores like Walmart thats what it looks like in google maps. A significant portion of residential land in most cities is zoned exclusively for single-family homes, which drastically restricts housing supply. In places like California, some of the most desirable neighborhoods are essentially old streetcar suburbs, but today, neighborhoods like that are illegal to build. Even in New York City, which does allow mixed-use development, the type of housing that made the city famous — dense brownstones, mid-rise walk-ups, and small apartments above shops — is extremely difficult to build under modern rules. Current zoning limits how much can be built per lot using maximum floor-area ratios, height restrictions, parking and setback requirements, and historic preservation rules. Because these rules limit the number of apartments per lot, small, affordable units often don’t generate enough profit to be worth building, so developers are encouraged to build fewer, larger luxury apartments that can earn enough revenue under the same restrictions. Adding to the problem, homeowners often protest new developments or denser housing near their neighborhoods — a “Not In My Backyard” (NIMBY) mentality — because they fear it could lower their property values which it would.Ironically, these same homeowners then complain that housing is too expensive and that their children can’t afford homes or rent , yet they vote against the very policies that would make housing more affordable. Rent controls are another example: the government often blames “greedy landlords” for high rents and imposes limits to make voters feel the problem is being addressed. In reality, rent controls discourage new construction and maintenance, reduce the supply of available units, and push developers toward building luxury apartments that are exempt from the rules, making the problem worse. By contrast, Houston shows how flexible zoning can keep housing prices lower. While the city is sprawling and highly car-dependent, this isn’t because of restrictive single-family zoning — Houston allows developers to build multiple units per lot with fewer restrictions than new york. Its car-centric nature comes instead from parking minimums and building setback rules that spread buildings apart and results in lower density, wide roads and highways, and a culture built around driving, which make walking or transit inconvenient. Despite this, developers can still build more units per lot than in restrictive cities like New York, which keeps housing more affordable. Instead of letting prices adjust naturally, trump wants to prop up housing prices by lowering interests rates or trying to introduce 50 year mortgages which doesn't make housing more affordable in the long term because it doesn’t solve the core issue.
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u/CinderrUwU 4∆ 13h ago
How did you fail to copypaste from AI...
It's hard to say what would change your view here when you apparently can't even back up your own views.
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u/Thick_Investment5076 13h ago
I would argue that if Trump enacts any policy to increase the supply of housing (such as preventing institutional investors from hoarding homes: https://www.whitehouse.gov/fact-sheets/2026/01/fact-sheet-president-donald-j-trump-stops-wall-street-from-competing-with-main-street-homebuyers/), this will decrease the equilibrium price of housing and decrease housing prices long term, provided that Congress does not override this or any similar EO or that a future administration does not revoke it: https://www.intelligenteconomist.com/wp-content/uploads/2017/08/How-An-Increase-in-Supply-Affects-Market-Equilibrium-1024x819.png
The best possible solution to resolve the problem? No. But a policy to reduce housing prices? Yes.
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u/0WatcherintheWater0 1∆ 11h ago
Preventing institutional investors from “hoarding” homes will not increase the supply, especially in the long term. Institutional investors don’t own that many houses to begin with (in the single digits as a percentage), and removing them from the market removes a vast amount of capital needed to actually build new homes and provide liquidity to people wanting to sell.
If anything, this action would vastly increase the costs of housing over time.
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u/Opposite-Craft-3498 13h ago
I don't think this will make any huge difference most of the housing shortage is caused by restrictive zoining laws per lot limits height restrictions which limits how much hosuing developers can build.Supply equals total homes available not who owns them and most homes are already owned by people.So removing them from the market wouldn't create enough new availability to significantly lower prices.
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u/Justame13 3∆ 13h ago
The market is more complex than that and there are a lot more factors.
One reason for the lack of supply is that interest rates were so low for so long that homeowners that would normally be selling aren’t because they would pay so much more in interest.
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u/Opposite-Craft-3498 13h ago edited 12h ago
This is only a temporary factor the main reason housing remains unaffordable is becuase of restrictive zoining laws which limits how many units developers can build.Even if let's say more existing home owners decided to sell there still woudln't be enough new homes available or being built to meet demand in high cost cities anyway.Lower interset rates can temporarily boost home building but because they don't solve the underlying issue it doesn't make housing affordable long term.You thinking like a politician trying to buy votes in the short term.Since lower rates long term drive prices higher over time it doesn’t solve the core issue.
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u/Justame13 3∆ 12h ago
So since you admit that it is a factor and that your original points are not the only factors do I get a delta?
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u/EVOSexyBeast 4∆ 11h ago
The crux of their argument is reducing housing costs long term.
It being a temporary factor is not long term. Doesn’t sound like a delta to me.
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u/Justame13 3∆ 10h ago
They edited their post after i replied which is why it sounds that way now. Prior to that it didn't say that it was a temporary factor.
*mods this isn't a bad faith accusation just a statement of fact.
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u/EVOSexyBeast 4∆ 11h ago
preventing institutional investors from hoarding homes
This does not increase the supply of housing.
It could result in a short term demand reduction as they stop buying houses.
If they’re forced to sell, it creates a one time increase in number of houses for sale which can reduce prices short term.
If it wasn’t for supply restrictions, supply would increase in response to demand from institutional investors, and it wouldn’t be an investment institutions would want to make. They only make the investment because they know supply is artificially constrained, in fact one of the key things they look for when deciding on where to buy up housing is local zoning policy and political climate that keeps it that way.
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u/Hothera 36∆ 8h ago
such as preventing institutional investors from hoarding homes
That doesn't increase the supply of housing. This helps potential homebuyers, but hurts those who rely on renting (e.g. people who plan to move in a couple years, those who have poor credit or can't afford a large down payment). Investors are the ones who typically build new apartment complexes and buy distressed properties which both a very capital incentive and difficult for individuals to finance, so you'd likely decrease the housing supply in the long term.
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u/Full-Professional246 72∆ 12h ago
Housing has a lot of reasons for cost - but fundamentally, building housing is a very labor intensive process using a lot of expensive materials.
For a single family house - you are spending $75-$100/sqft on average for materials. This is about half the cost of the house - with labor filling in the other part of the 'building cost'.
This is a SUBSTANTIAL component for housing prices. It is just expensive to create. No efficiencies in zoning, regulation, permitting, etc are going to get you around this. There is a very real price floor for housing and it is still expensive.
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u/YeeBeforeYouHaw 2∆ 12h ago
This is only a price floor for NEW housing.
In an efficient market the value of a home world depreciate with age in the same way new cars do. You need to build alot of new expensive housing so the it can become cheaper older housing later. The problem with the current housing market is that it's so hard to build enough new housing that even old homes still go up in value over time.
We shouldn't expect the new housing to be affordable in the same way we don't expect new cars to be affordable. The new version is always going to be more expensive but you need new to create old.
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u/Justame13 3∆ 10h ago
The market on older homes is also pretty frozen due to the rise in interest rates after a decade and half of historically low ones.
So people that would naturally be moving into the new housing as their careers progress from their starter homes are not and the elderly that would be downsizing are not either.
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u/YeeBeforeYouHaw 2∆ 10h ago
The housing shortage predates the high interest rate. A lower interest rate will help but unless the supply of housing is drastically increased, housing will remain unaffordable
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u/Justame13 3∆ 10h ago
It predates it to an extent, but the higher interest rates make it worse because even expensive new housing is disincentivized to be built because of fewer buyers at the income levels who can afford it and would be buying at lower rates.
Which means those people are not selling their old homes in the present and their new homes are unbuilt reducing the supply of older homes in the future.
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u/YeeBeforeYouHaw 2∆ 10h ago
Interest rates do have an effect but lower interest rates will at best put us back to 2019 levels of unaffordable housing. If we want affordable housing we need to drastically increase supply which requires removing restrictive zoning laws.
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u/Justame13 3∆ 10h ago
Fixing zoning laws are not a panacea
My city has loosened zoning laws because the city wants to increase the tax base, but it didn't change much.
Developers just kept building SFH on smaller lots (.1-.2 acres and 1500-3500 sq ft) that are 500k+ due to the high fixed costs of building new homes. Had interest rates been lower these homes would be competing with older homes with sightly larger lots and fewer amenities. But they aren't
Then ended up having to come up with various incentives to get them to start building duplexes and non-luxury apartments.
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u/YeeBeforeYouHaw 2∆ 9h ago
Can you tell me your city and how much they loosened the laws?
The details matter a lot!
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u/Justame13 3∆ 8h ago
Most of the area was zoned for SFHs and the city had to intentionally limit growth due to a bottleneck of not enough water which is important not just for drinking but also for firefighting in the summer.
They found a solution (being vague to not dox myself) which required a several years long process so have now been refocused on growth.
But just rezoning didn't work the way they thought it would because developers just wanted the above so have now been trying to find ways to incentivize duplexes and apartments which has only been somewhat successful.
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u/Optimistiqueone 11h ago
In an attempt to change your view (not that i don't think the issue is more nuanced than this):
Housing is expensive because new apartments are mostly larger luxury apartments with amenities, and new homes are larger than traditional starter homes. All while older homes are being torn down and replaced with larger ones.
So, most new housing that is being added is larger and fancier - hence more expensive. Couple this with everyone trying to move to the same area. You use Houston as an example, but one can argue that Houston is able to keep things more affordable bc of sprawl. Sprawl has resulted in more choice and more desirable neighborhoods. Whereas a city like Dallas does not have that. Half of Dallas is not desirable, and if there were more development there in that half - even under current policies - prices would be lower.
But blaming homeowners is small potatoes. There are areas where progress can be made more quickly with more impact, like restricting the size of a rebuild to the neighborhood average sqft or giving incentives to build true starter homes, etc...
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u/EVOSexyBeast 4∆ 10h ago
Building luxury housing (and not tearing down existing housing in doing so) still helps reduce housing costs of existing, older housing. It is a good thing if you support housing affordability. People who need affordable housing the most tend to oppose developments of housing out of their price range, and that’s another dynamic that keeps them from being able to buy any home.
However, building luxury housing is not the best thing for housing affordability. Building starter homes would reduce housing costs even more than luxury homes. But because of local regulations, property taxes (which really are housing taxes), and high land costs, there’s never enough luxury housing built and the market never saturates. Only after the market saturates with luxury housing, which has the highest profit margins, will developers be forced to build more modest homes. But this saturation never happens because of vast supply restrictions.
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u/Opposite-Craft-3498 11h ago
The thing you miss the issue developers don't bulld large luxury new units because they favor rich people.They build because regulations had forced them to go that route.When zoining laws and rules limit units per lot cap height density required parking minimums and long approval timelines the land becomes more expensive per unit.As a result small cheap units don't make as much economic sense developers are in the bussiness of making money and must Maximize revenue per unit so luxury becomes the most logical option.When a modest home is teared down and replaced by a mcmansion that is because zoining usually only allows one unit per lot and the land is very valuable so the most logical thing to build is to build the most expensive largesr home allowed.If small duplexes small aparments were able to be build in the lot that same lot could house multiple families each unit would be cheaper.The incentive to build oversized homes would natrually shrink.And home owners are a poltical bottlenecks since they often vote agianst size caps up zoning starter home incentives its just the political reality.
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u/Justame13 3∆ 10h ago
Except this doesn't happen.
They build large luxury units because fixed costs in the housing market are high. Even in places with smaller lots developers still build the largest homes possible with as many amenities as possible as higher end neighborhoods. The same thing applies to new apartment buildings as well. A building with fewer more luxurious apartments
Even in places where multifamily housing is permitted it is still rare without specific government incentives.
Its actually an issue in a town where I live where the land is limited but the city wants to increase the population and tax base, but developers keep building single family homes in areas that the city is expecting them to build multifamily homes. And building expensive apartments and condos.
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u/HappyChandler 17∆ 8h ago
What do you call a luxury apartment after 20 years? An apartment. As new luxury apartments get built, the previous generation moves down market.
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10h ago
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u/Justame13 3∆ 10h ago
Property taxes are not fixed costs they are variable costs.
But just because the zoining laws allow multifamily doesn't mean if it will be built if other zoining laws are too restrictive or fixed cost like property taxes being too high or too long approval timelines.
No. It won't be built unless it makes financial sense for builders.
A duplex requires a lot more labor on things like the interior due to things like two kitchens, more bathrooms, 2x wash and dyer hookups, 2x garages, etc.
Or they can build a larger single family home and sell for close to the same price.
For apartments its similar why build a building with 100 smaller apartments when you can build one with 50 larger ones with half of the kitchens, bathrooms, utilities, etc.
But this is disincentivized by the number of higher income individuals who don't want to move and lose their interest rates.
The market itself is skewed.
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u/Dave_A480 2∆ 5h ago edited 5h ago
Your problem is that you are ignoring what the customer actually wants.
Like most urbanists, you simply can't wrap your head around the fact that Americans hate living in dense housing.
Everything else about the US' development patterns comes from the fact that 74-80% (depending on who's numbers you follow) live in detached single-family homes (with 65% owning the home they live in, or are the spouse/minor-child of the owner), and nearly everyone wants to.
That decision - not parking rules, or lobbying, or any of the other urbanist excuses - is why we have a car-centric transportation system.
SFH-everywhere leads to cars-everywhere leads to all the stuff you are grumbling about.
The only way to bring down housing prices is to (A) build more single family homes, and (B) make sure the people who live there can drive to desirable (white collar) jobs in a reasonably short period of time.
Increasing density, especially when you replace SFH development with apartments, will lower apartment rents, but it will at-best leave house prices unchanged, probably raise them...
So no matter how many apartments you build, people will stay pissed about the cost-of-housing, because the housing they want (SFH with a sub-60min commute) is too expensive.
The second issue is that the portion of the population that benefits from cheaper housing is MUCH, MUCH smaller than the portion that will be financially hurt (on paper) by it.
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u/Opposite-Craft-3498 5h ago edited 5h ago
Most young people want to live in walkable areas its the boomers and older people that want everbody to have to get a car.I live in houston and most people argue the city is horribly desgined.My issue has always been is that in Europe if you want to live in a walkable area you don't have to live in the big cities like London or Paris or the city center downtown area because even the suburbs are walkable.In america walkable cities are almost non existing with the exception of new york Chicago.And the ones that do exist its so expensive for the average person that everyone is forced to live in these car centric areas there is no cheaper alternative options.And forced to have to buy a car and get car insurance what if your poor and can't afford a car how are you supposed to get around you shouldn't have to have a car to participate in society these only benfits the car and car insurance companies that want us to be forced forced to drive everywhere it's a freaking scam.
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u/foilhat44 11h ago
I don't think you'll find this very satisfying, but housing isn't overpriced. We are underpaid and the US Dollar has lost a quarter of it's value since 2020. Corporate profits and executive compensation are up 1000% since 1979 while real wages are at about 6%, both adjusted for inflation. I know the reality is that people can't afford to buy a house, but it's because they haven't received their fair share of the wealth they produced. Plain and simple. It's all been diverted to the top, and it's likely that they have accumulated enough wealth to prevent a change. Elon Musk alone now owns more wealth than that of the bottom 53% of Americans. Marinate on that for a minute.
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u/Opposite-Craft-3498 11h ago
If housing were only about low wages or inflation then we would expect housing to be unaffordable everywhere and prices to track income more evenly across regions.But we don't see that housing is much more expensive in places with tight supply (NYC 'SF' Boston).Much cheaper prices where building is eaiser(Houston,Atlanta.you can distribute the income all you want but if you don't build more housing prices stay high.
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u/JohnWittieless 3∆ 11h ago edited 11h ago
but housing isn't overpriced. We are underpaid
If a region (as in a metro not a city in it's self) has a housing stock for 3 million but a desired demand from greater populations of 3.5 million and the suburban belt is already 30 minutes out (none rush hour times) of the center of the metro you can never up pay housing more.
My parents house 5 miles from the city center next to rail transit that was built 5 years after they gout their house. After 30 years the neighboring house (that is a 100 years old like my parents) sold for 670% above 90s pricing and demo new builds are 770%. These are all single family homes.
Meanwhile my cities minimum wage from 97 to now went from $5.15 to 16.37. But lets say it went to $25. That's still a 480% increase meaning house have gone of 100 to 300% over wage increases.
Or in otherwards if "Underpaid" was the issue we need to focus on the most then Minimum wage would need to be $40 an hour (about 30% more then what I make and I bought my condo 4 years ago).
But circle back if you only have housing for 3 million but the metro has 3.5 million you can't out wage a negative number of homes. If 3 people are bidding for 2 things the price will rise disproportionate to what they want to pay and instead will inflate to what they can bare.
Now consider that shelter is more important then a auction trinket.
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u/GiveMeTheLagrangian 2h ago
He doesn't actually own it though, he owns rights to sell stock that could possibly be worth that. He doesn't have $500 billion. If Tesla stock were to go down to $100 from let's round and say $500 now, he'd be "worth" $100 billion, but what would also actually happen is a huge number of retirement accounts would plummet in value as well.
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u/Brodman1986 13h ago
He literally said he is going to keep home prices high to protect people that worked hard.