John Hood: On Affordability, Deeds Trump Words
RALEIGH — Most federal, state, and local policymakers are saying the right things about housing. Our leaders say they want to make it easier for young people to purchase homes and older people to keep them. But are they doing enough to turn their words into deeds?
To make housing more affordable, we must build more of it. Expand supply to meet demand, and prices will adjust accordingly. That’s how the market process works. And this comports with the findings of most empirical research on the issue, which shows a positive relationship between barriers to new housing and its average price.
How can policymakers encourage more housing supply? By easing regulations that limit where new housing can go, how many units can be constructed per acre, and how many (non-safety) amenities are required. By streamlining the process to get a building permit. By eliminating tariffs on lumber, steel, appliances, fixtures, and other goods used to produce housing for sale. And by creating more ways for skilled workers to emigrate legally to the country to fill construction jobs while also encouraging and training young people to enter the field.
Want to make it easier for households to obtain mortgages? Rather than monkeying around with price controls or pressuring the Federal Reserve to lower rates, policymakers should go after one of the primary pressures on credit markets: Washington’s reckless deficit-spending. When the government is borrowing heavily, Adam Millsap of Stand Together Trust argues, “it has to increase interest rates to attract more investors,” and then those higher Treasury rates “push up mortgage rates, as well as car loans, small business loans, credit card rates, etc.”
These aren’t new ideas. Outside the fever swamps of populist and socialist agitation, they aren’t even particularly controversial ideas. But applying them consistently can be difficult. Every zoning code, bureaucratic delay, import tax, and labor-market regulation has a political constituency — someone who gains, or at least expects to gain, by shutting others out.
Despite these challenges, state and local leaders in North Carolina have implemented some important reforms in recent years. As a result, we are, indeed, better off than most places. According to the latest data I could find, only Idaho is adding new housing stock at a faster rate than North Carolina is. Among large metropolitan areas, Raleigh-Cary topped the list with 28.8 new units per 1,000 existing homes, followed by Austin (28.6), Dallas (22.2), Houston (21.6), and Phoenix (21.4). Charlotte-Concord-Gastonia came in sixth with 21.3. Among mid-size metros, both Wilmington (1) and Asheville (10) ranked high. Among small metros, Burlington ranked fifth.
Because North Carolina is adding population faster than the nation as a whole, such increases in supply won’t necessarily yank housing prices dramatically downward. What they will do — what they already seem to have done — is lessen the upward pressure on prices, and produce modest declines in some local and regional markets.
Now is no time to pause, however. Some of our competitors are pressing forward with ambitious reforms. Colorado and Arizona, for example, have adopted statewide reforms to permit residential uses in commercial zones, allow single-stair multifamily designs, and ease parking mandates. Lawmakers in Florida, Idaho, and Virginia have enacted bills requiring their municipalities to legalize manufactured homes within their jurisdictions. I’ve long been an advocate for this policy, which taps the tremendous potential of mass production and automation to serve a broad swath of price-sensitive workers, young families, and retirees.
Matching words with deeds on housing is the right thing to do. It’s also the politically astute thing to do. Affordability remains a top priority for voters. A recent High Point University poll revealed significant pessimism among North Carolina voters, with 59% describing America’s economy as getting worse rather than better, 54% opposing the administration’s tariffs, and 81% saying price increases have greatly or somewhat affected their spending decisions.
Many barriers make housing artificially scarce, and thus inordinately expensive. We can’t afford to keep talking about them. They must come down.
John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
