Staff Reports
The Federal Reserve’s battle against inflation is like a game of whack-a-mole. They’ve managed to smack down inflation in many areas, but it keeps popping up in the housing market. The Fed is tightening the monetary supply faster than a kid trying to keep their room clean when company’s coming over. This has helped bring down the inflation rate, but housing prices are still skyrocketing like a SpaceX launch.
The housing industry is like that one kid who won’t share their toys. It’s refusing to let the Fed tame it, and it’s causing a ruckus for the whole neighborhood. The average home prices shot up by almost half during the pandemic peak and have only dropped a measly 11% since then. Why? Because of those pesky anti-growth zoning laws that are suffocating new housing like a boa constrictor.
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Zoning laws are like a picky eater at a potluck – they’re super particular about what they allow. Some areas only want single-family homes, while others have height and parking requirements that are stricter than a teacher on the first day of school. These laws started a long time ago and were sometimes used for racial discrimination, but now it’s all about protecting property values. It’s like a gated community for the housing market – keeping out the riff-raff to keep prices high.
Economists are making the case that these zoning laws caused the Great Recession, in addition to federal incentives for mortgages. They argue that restrictive zoning forced lower-income buyers into less regulated markets, which helped crash the economy like a car with no brakes.
Then along came Uncle Sam with his bag full of COVID stimulus money, and he accidentally threw it on the housing market like it was a bonfire. The result? Home prices shot up, causing a shortage of rentals and low vacancies for homeowners. It’s like the housing market is putting up a “no vacancy” sign and locking the doors.
New housing starts have been dwindling for years, and the Census Bureau estimates that there are 7.2 million homes missing. That’s like trying to find Waldo in a crowded football stadium – nearly impossible. Zoning laws have made it illegal to build certain types of housing in many areas, pricing out the little guys who just want a slice of the American dream.
But there’s hope on the horizon! A movement called YIMBYs, which stands for “yes in my backyard,” is pushing for zoning reform. It’s gaining momentum, even in red states like Montana and North Dakota. These governors are making it easier to build affordable housing and encouraging more walkable neighborhoods. Democrats are starting to catch on too, but it seems like the best progress is happening in the red states.
President Biden seems to be ignoring the housing supply problem, focusing instead on giving out cash credits to first-time homeowners. It’s like trying to put out a fire with a water gun – it might make a little splash, but it’s not solving the real problem. It’s time for the government to get serious about zoning reform and start building more housing. Otherwise, the housing market will continue to be a rollercoaster nobody wants to ride.
