Addressing the US Housing Crisis: The Role of Home Builders and Policy

The United States is currently grappling with a significant housing shortage, a situation that has persisted for years. Various solutions have been proposed, with a focus on the role of home builders and the Biden administration's initiatives to alleviate the crisis. However, the question remains: can the federal government and home builders effectively tackle this issue, or is the free market the best approach?

Challenges in Government Intervention

Anytime the federal government takes on a major project, as evidenced by the numerous failed initiatives and policies, results are often disappointing. This is particularly true when it comes to housing policy. One proposed measure is a banning of investment groups owning single-family homes. While this may seem like a positive step, it comes with several drawbacks:

Long-term implementation delay: Ten years is an unreasonably long time to wait for such changes. Home builders and vested interests will undoubtedly work to overturn any such measures before they come into effect. Lack of widespread support: The proposal lacks broad support across all stakeholders, indicating a lack of consensus on its effectiveness. Political considerations: With an election year on the horizon, it’s unlikely that the government will take any action that might be perceived as beneficial to the public.

These factors make it highly unlikely that the proposed measures will be implemented effectively or efficiently.

Market Forces and Housing Supply

Some argue that the free market should solve the housing shortage, citing the incentive-based and profit-driven nature of the housing industry. ForRepublicans, this is the most logical approach. They believe that if the right incentives are in place, people will work harder, earn more, and thus have the means to buy homes. However, history suggests that this approach alone has never been sufficient:

Never worked without massive wealth transfer: The free market, by itself, does not account for the wealth inequality that results in housing affordability issues. If home builders cannot make a profit, they are less likely to build homes. Conversely, if profits are high, construction rates might still be insufficient to meet demand.

Options for Tackling the Housing Shortage

To address the housing shortage, there are several approaches home builders and policymakers might consider:

Forceful Action on Existing Housing: One option is to accelerate the removal of homes occupied by elderly or low-income individuals so that younger, more financially stable families can move in. This approach, while controversial, might help increase the supply of available homes. Subsidized Housing Construction: Another method is to incentivize home builders to construct more housing at a loss. While this would inevitably lead to some builders going out of business, it could help meet the burgeoning demand for homes. Increased Minimum Wages: A more equitable approach would be to raise minimum wages substantially, allowing more people to afford housing. However, this would require significant political will and support across various sectors.

Conclusion

While the free market's role in addressing the housing shortage is significant, it cannot be relied upon entirely. The inclusion of strong government intervention and policy measures is necessary to ensure that more homes are built and that those homes are affordable and accessible to all. The US housing crisis is multifaceted and requires a multi-faceted solution.

The Biden administration, home builders, and policymakers must work together to implement comprehensive strategies to address the housing shortage. Only then can the US truly start to tackle this ongoing problem and ensure a more stable and equitable housing market for all.