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If the 2020 Dem Candidates Really Want to End the Housing Crisis, This Is How They Could Do It

The opinions expressed by columnists are their own and do not necessarily represent the views of
AP Photo/Elise Amendola

As house prices in parts of the nation continue to soar to unaffordable heights, candidates for the 2020 Democratic Party nomination have laid out how they would end the squeeze in the recent debates. Although the presidential hopefuls are pledging hundreds of billions of dollars to fix the problem, they should be taking aim at the onerous regulations that keep the nation’s housing stock constrained. 


Senator Elizabeth Warren (D-MA) recently announced that she hopes to invest $500 billion in affordable housing for low-income families. Meanwhile, California senator Kamala Harris has earmarked $100 billion to offer minority first home buyers $25,000 each, as well as tax credits for renters who spend more than 30% of their income on housing. Senator Cory Booker (D-NJ) similarly plans to cap monthly rental payments at 30% of an individual’s income, to the tune of $134 billion each year.

The one thing these headline policies all have in common is that they skirt around the real cause of the affordability crisis: Regulations that keep the supply of housing down and the cost of housing up.

A wealth of empirical evidence suggests that housing becomes unaffordable not because consumers don’t have enough money, but because existing homeowners have too much political power to keep the residential supply low. For example, a 2003 study by the National Bureau of Economic Research found that in some of the most regulated cities, land restrictions constitute a tax worth over 10 percent of a property’s price. Another similar study found that regulations were the key to a lack of housing in Boston. Meanwhile, researchers at Point Loma Nazarene University in California suggest that 40% of the cost of new housing in San Diego is derived from regulatory burden.

To make matters worse, the cost of over-regulation isn’t just borne by struggling renters and buyers. Researchers at the University of Chicago recently found that US aggregate growth was down 36% between 1964 and 2009 because of onerous housing regulations in the nation’s economic powerhouses, such as New York and San Francisco. Not only would the country’s economy be stronger, but cutting housing regulations would help the poorest Americans who are priced out of expensive cities. 


As a former Harvard professor, Sen. Warren appears to be the most aware of these academic findings. The Warren plan rightly seeks to address onerous regulations, such as minimum lot sizes and mandatory parking requirements. However, her approach continues to favor wealthy, NIMBY (‘not-in-my-backyard’) states. To incentivize states and local governments to ease these regulations, Sen. Warren would offer $10 billion worth of infrastructure grants that are conditional on regulatory easing.

While this ‘carrot-rather-than-the-stick’ approach appears sensible on the surface, cities that were never part of the problem in the first place will now have to pay to incentivize their NIMBY neighbors to ease housing restrictions. With the nation’s highest cost of rents occurring in wealthy states like California, New York, and Hawaii, why should the poorest states pay for them to change?

To incentivize states and cities to adopt pro-growth regulatory rollbacks, lawmakers should make existing funding programs conditional on achieving benchmark levels of regulations. When the wealthiest communities in the country keep their neighborhoods closed to newcomers, they should also remain closed to federal infrastructure and education funding that is often subsidized by the poor.

This approach has historically enticed states to reform their regulations without creating even more costly government programs. For example, in 1974 Congress made federal highway funding conditional on states lowering their speed limits. In 1984, the threat of reducing highway funding was again used to compel states to raise the minimum age to purchase alcohol to 21.


Rather than applying billion-dollar band-aids to the lack of affordable housing, policymakers from across the aisle should focus on the regulations that keep an increasing number of Americans out of their dream home. If candidates really want to help the most marginalized in society, they should start by taking aim at the regulations that stop them from moving to the nation’s most productive cities.

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