If you want to know what is driving many Americans to embrace socialism, one of the major factors is the American education system. At your local district level, schools have not taught the past few generations of children the basics of economics. The astonishing ignorance of the public in basic economics is remarkable to see today.
I remember back in 2024, when republicans were complaining (understandably) about the Biden administration flooding the market with trillions in borrowed cash to keep the economic GDP numbers up, and to buy votes with government checks. Inflation and affordability were key factors in Trump's victory in 24.
As soon as republicans were in charge, they gave up on that messaging. Why? Well because making prices go down is hard to do through federal government policy. The one thing Trump has done well is open the energy markets up, and the price of fuel has dropped dramatically. That helps lower prices across the board as everything that goes to market needs to use energy to get to your store, or your front door.
Inflation has been stuck around 3%, which is about a point higher than optimal. Remember at one point in the Biden administration, it rose to 9%. You can't get those price hikes back, you can only slow that rise down to a manageable level. Even at that magic 2% inflation rate, prices go higher each year. However, if the economy is growing at 2.5 - 3.5%, your purchasing power goes up. You don't feel those small price hikes with more money in your paycheck.
When people look at housing, it becomes a bit more simple. It's Supply and Demand. Do you see subdivisions being built all over your town? No, new subdivisions are a rarity. This is the lack of supply in the housing market.
The persistent lack of sufficient new housing supply has been a major driver of rising home prices in the US. The country faces a shortage of around 4 million homes right now. That shortage has led to increased competition among buyers. This has pushed prices up by 60% nationwide since 2019.
There is no real way for the federal government to increase home building. Getting the interest rates down will help people afford more home, but it doesn't drive home prices down. Supply does that.
Have you heard anything from your State, County, or City politicians talking about how they will be reducing regulations, lowering permit fees, lowering new home taxes, lowering developer fees, cutting permitting times, or making rezoning happen? No. Not at all.
The people who own high priced homes they've had for decades, they want to keep their neighborhoods exactly the way are. They vote politicians into these County Supervisor seats, and City Council seats to keep any new houses from being built in their neighborhoods, or being built in their general area at all.
I'm not sure what can be done with this. I guess that's what we are seeing in the huge migration from Blue States to Red States. These Red States, for the most part, are much friendlier to building homes.
The other side of this is the Demand side of the equation. Say what you will of President Trump's immigration policies, 1.5 million illegal citizens self-deporting and another half million deported is driving the demand side down a bit. It's just not quick enough to drive rental housing prices down much, and it doesn't really effect the middle class housing demand side.
So, what can done to address these frustrated Gen Z and Millennials who would love to afford a home? It's a little late to sign them up for YouTube classes on how basic economics work, but we can be honest with them. The people you vote for at the local levels matter. Have these new home buyers show up at their Board of Supervisor's meeting, or City Council meeting and ask those politicians questions. Ask if the policies they are approving to make these 'smarter cities' or 'greener cities' or 'more sustainable cities' will they make new homes cheaper or more expensive? You will be ignored, or given a word salad of slogans and buzzwords to shut you up.
That is what's going on with the affordability crisis. Local and State policies drive up regulation, and costs, while they drive down new home building....
It's not a bug, it's a feature of the class of people who are running your local governments.
Vote them out. That is really the only answer.
