America is facing a two-headed problem resulting in declining homeownership. We have not built enough housing since the Great Financial Crisis. At the same time, the cost of producing new housing has continued to rise, pushing homeownership further out of reach for millions of Americans.
The result is showing up in declining homeownership opportunities, particularly at the lower-cost end of the market.
Homeownership has traditionally started with something modest: a smaller detached home, a townhome, or a condo. Increasingly, those options are difficult to build at price points first-time buyers can afford.
America doesn’t just need more housing. We need more front doors people can afford to own.
Our latest report, Unlocking New Homeownership Opportunities, looks at the regulatory barriers standing in the way by outlining what local, state, and federal policymakers can do about them.
Missing: Focusing on the Homebuyer
Housing policy has become fragmented.
Land use is considered separately from infrastructure. Infrastructure is considered separately from environmental regulations. Building codes are considered separately from permitting. Energy regulations are considered separately from all of them.
And at very few, if any, points in the discussion of these policies do policymakers focus on the end user: the homebuyer. This is important for two reasons.
First, it is the homebuyer who pays for everything.
A developer once described this to me as “stacking nickels.” One additional requirement may appear insignificant. Add another nickel, then another and another. Eventually you stop and count the pile and realize how much money is sitting there.
Housing regulation works much the same way.
Secondly, many of these policies are not viewed as housing policy. The tensions over state and local land use standards are framed as local control. Energy codes are viewed as climate change policy. Water regulations are viewed as environmental policy.
Every regulation may have a legitimate rationale and a seemingly small price tag. But the family trying to buy the finished home doesn’t experience those costs individually. They experience them as a mortgage payment.
Affordability is easily lost when policymakers don’t consider the homebuyer, their needs, and their ability to pay for all the “extras.”
Start By Stopping
Over the years, I’ve been asked by policymakers in dozens of states where they should start when it comes to addressing the housing crisis, and my response is always the same: Start by stopping.
Stop adding to the cost of new units. Stop adding new procedural barriers. Stop making things more complex.
Housing’s regulatory framework is like loading a backpack. One additional requirement may not seem particularly heavy. But keep adding mandates, fees, delays, and restrictions without ever stopping to weigh the bag, and eventually it becomes too heavy to carry. In housing, the homebuyer is the one carrying it.
Before we talk about making housing more affordable, policymakers need to stop adding weight.
Tackle The Biggest Barriers
Moving into actual reforms, the most consequential barriers have to come first.
In too many communities, the starter home didn’t disappear because Americans stopped wanting it. The rules governing what can be built changed the economics of producing it.
Large minimum lots, excessive setbacks, parking and garage mandates, aesthetic requirements, and other restrictions can limit the types of homes that can be built or increase their cost.
You can’t require expensive lots, expensive infrastructure, and expensive design and then demand an inexpensive house.
That is why comprehensive land-use reform has to be the starting point.
States can establish reasonable minimum standards that allow communities to accommodate more housing types while preserving legitimate local decision-making. Smaller lots, townhomes, condos, and modest detached homes should not be treated as exceptions to be negotiated one project at a time.
And when a proposed home already complies with the rules, approval should not require winning a political campaign nor face a secondary pocket veto.
In markets where environmental reviews serve as a NIMBY fail-safe, those reviews should exempt housing that meets the state’s standards for permitted use.
Then Attack the Big Cost Drivers
Allowing a home to be built is a critical step, but movement on affordability is muted if the process of actually building it makes the final product unaffordable.
That means policymakers also have to confront the second tier of major production and affordability barriers: permitting delays, infrastructure requirements, impact fees, stormwater regulations, building codes, energy codes, and other major regulatory costs.
Growth should pay its proportionate share of infrastructure costs. It should not become a mechanism for loading unrelated community improvements onto tomorrow’s homebuyers.
Building and energy codes should protect health, safety, and durability without losing sight of affordability. Permitting systems should provide predictable timelines. Infrastructure and environmental requirements should accomplish their intended purposes without unnecessarily consuming buildable land or adding duplicative costs.
The report identifies reforms across each of these areas, from permit shot clocks and impact-fee reform to stormwater, infrastructure financing, building-code cycles, and performance-based energy codes.
This is where the “stacking nickels” analogy matters.
The question isn’t whether each individual regulation adds $1,000 or $10,000.
The question is whether the homebuyer can afford what they collectively require.
Leave No Stone Unturned
After addressing the foundational and major barriers, policymakers should keep going.
Some housing barriers are widespread. Others vary considerably by state or market.
Tree requirements, water rights, engineering standards, HOA mandates, condo defect laws, surety requirements, permit fees, inspection systems, and code interpretations may not carry the same weight everywhere. But where they create unnecessary costs or uncertainty, they deserve attention.
The report intentionally treats these differently from foundational reforms while still recognizing their cumulative importance.
There is no single policy that made housing expensive. There will not be a single policy that makes it affordable again.
That is why policymakers should resist the temptation to search for one sweeping solution. Comprehensive housing reform means fixing the largest barriers first while continuing to work through the dozens of smaller ones that collectively determine whether a project works.
Homeownership Needs More Front Doors
For too long, housing policy has focused on individual rules without sufficiently considering their cumulative effect on the people at the end of the process.
We need to reverse that thinking.
Start with the homebuyer. Stop adding barriers. Fix land-use rules that prevent needed homes from being built. Address the major regulatory costs that make those homes more expensive. Then keep working through the smaller and more market-specific barriers that add cost, delay, and uncertainty.
No single reform will solve America’s housing crisis. That’s the point.
We built today’s housing regulatory system one layer at a time. Making homeownership attainable again will require peeling those layers back.
America needs more housing. America needs more homeowners.
And that means making room for more front doors.
