"But the real problem is the way housing supply is constrained by red tape. To house people more affordably, we need to make homebuilding more efficient. But a deeply entrenched overregulation of land use and the building trades keeps homebuilding firms small and backward. Other industries-aviation, computing, agriculture, containerized shipping, manufacturing, retail, telecommunications, and so on-have raised productivity through deregulation, big business, innovation, automation, standardization, and scalability. Homebuilding needs to follow suit."
"Housing really has become unaffordable for many people, and Figure 1 sheds light on this by comparing (a) the median sale price for homes, (b) the Case-Shiller home price index, and (c) median household income, all adjusted for inflation and normalized so that the year 2000 = 100. Together, they detail how home prices have diverged from paychecks. Figure 1. The time trend towards housing unaffordability"
"Why is housing so expensive? In most sectors, modern technological capitalism has brought plenty, making former luxuries cheap, and food plentiful, yet it seems harder than ever to get a roof over one's head. What explains that? Naturally, there are multiple factors. Partly, remote work has dialed up demand. Partly, housing is a financial asset that often tracks other financial assets such as stocks. But the real problem is the way housing supply is constrained by red tape."
Housing affordability has worsened as home prices have diverged from incomes, driven primarily by constrained supply rather than only demand or asset-price effects. Remote work and financialization have raised demand and correlated housing with other assets, but restrictive land-use and building-trade regulation are the main barriers to efficient homebuilding. Overregulation keeps builders small and technologically backward, preventing productivity gains achieved in other industries through deregulation, consolidation, innovation, automation, standardization, and scalability. Scaling up and modernizing homebuilding could lower costs and expand supply, addressing unaffordability that income growth has not matched.
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