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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.
But the deepest gap is usually where rents don’t pencil for new construction on their own.
This is precisely due to overregulation.
directly support deeply affordable housing
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.
It does not repeal profit motive.
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).
the market will undersupply that tier even in a freer regime
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.
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:
- Why are you arguing that the opposite of what Austin did is what should be done?
- Why did you argue that "the market will undersupply that tier even in a freer regime" if in your article you prove that that's the opposite of what happens in reality?
Non rhetorical questions, I'm confused.
you're arguing with ChatGPT
Hey thank you, I should have noticed. I just read his last answer and the list-scheme plus final argumental contortion seals it. So, "you are exactly right!".
Here’s the distinction:
What Trump’s EO does:
- trims some federal barriers
- tries to speed up reviews and lower some compliance costs
- nudges states/cities toward easier permitting
What Trump’s EO does not do:
- override local zoning
- legalize apartments in more neighborhoods by itself
- force smaller lots / more units per lot nationwide
- guarantee an Austin-style supply surge
That matters because Austin’s result came from more than “deregulation” in the abstract. It came from actual local land-use liberalization plus enough building to create a real supply wave.
So I’m not against deregulation.
I’m saying Trump’s EO is only a partial version of what Austin actually needed to get rents down.
Trump’s EO can trim federal friction; it cannot by itself deliver Austin’s local supply shock.
Trump's directive, effectively, directly and optimally solves the deepest gap. Anything but what Trump just did would only fuel the problem.