The president’s new directive gets the federal government out of the way of construction.
Much of the policy press last week followed the Senate’s passage of the ROAD to Housing Act, which supporters claim will reduce housing costs. Yet last Friday, to little media fanfare, President Trump issued an executive order on “Removing Regulatory Barriers to Affordable Home Construction” that will do far more to bring down costs.
Indeed, Friday’s order is one of the more important federal housing actions ever undertaken. That’s because it focuses on solving problems caused by the federal government itself. Though hardly a panacea, it is an important step toward addressing the nation’s housing supply crisis.
For decades, housing wonks have been frustrated that most barriers to housing are at the state and local level. That limits how much federal lawmakers can do. The ROAD to Housing Act, for instance, tries to solve the housing crisis through a litany of new reports (the act uses some variation of the word “report” almost 100 times), grants to state and local governments, and new federal regulations—which, on the whole, will probably make housing more expensive.
Yet, though they often go ignored, there are distinct federal burdens on housing. Trump’s executive order tackles them head-on.
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It probably helps at the margin on permitting, manufactured housing, and suburban/exurban supply. But it doesn’t directly solve the deepest gap. The 35-per-100 problem (#1451600) is at the extremely low-income tier, where rents usually don’t pencil for new construction without subsidy.
Trump's directive, effectively, directly and optimally solves the deepest gap. Anything but what Trump just did would only fuel the problem.
Reducing regulatory friction can help general supply. But the deepest gap is usually where rents don’t pencil for new construction on their own. That’s why the stronger approach is: reduce friction + directly support deeply affordable housing.
This is precisely due to overregulation.
This is precisely what eliminating overregulation does.
You greatly underestimate the problem by calling overregulation "regulatory friction". It's not like "it's just a little more difficult". It's an insane burden which bears sole responsibility for unaffordability, both because of the direct and indirect cost increments it entails, and the limited offer resulting from the mass extinction of providers it causes.
Deregulation can expand supply. It does not repeal profit motive. If the lowest rents still don’t cover cost + return, the market will undersupply that tier even in a freer regime.
It's exactly the reason why it helps to lower prices. You DON'T want to repel profit motive if you want lower prices. If you repel profit motive, exactly what you described will happen: the lowest rents will still not cover cost+return, and the market will undersupply (which is exactly what's happening right now).
That is the exact opposite of how it works (of how anything works within the economy, to be precise). Only a freer regime can allow an increasingly affordable offer to rise.
Austin tested this.
Profit motive didn’t disappear.
It got forced to compete because Austin loosened local housing rules (a form of deregulation), unlocking enough supply to raise vacancies and strip landlord pricing power.
~120,000 new units (~30% more supply) → vacancies rose → landlords lost leverage
Result:
Rents fell.
Lower-end units fell the most (~11%).
So no, the market does not always undersupply that tier.
It undersupplies when scarcity protects pricing power.
Austin broke scarcity.
Prices fell across tiers.
That’s also the test for Trump’s EO:
If it helps create real supply at scale, it points in the Austin direction.
If it’s just federal deregulation without enough actual building, nothing meaningful changes.
No supply surge, no Austin result.
#1456519
But this is what I said. You are saying it yourself: it's all about deregulation and allowing for a freer market. I see the post is yours. If you already knew about this:
Non rhetorical questions, I'm confused.
This is the way to address complex problems: fix the obvious stuff and let the system adapt to the new equilibrium. Then, new solutions might become obvious.
I doubt this will move the needle
Me too. I have a feeling that in the cities where housing is most unaffordable, it's the local regulations that are constraining the supply, not the federal regulations.
I suppose loosening some rules on accessibility to federal funds could help, though.