Parker Sheppard

A home of your own—a place to lay down roots and start a family—is the classic American dream. Increasingly, however, many newlyweds looking for a home find it unaffordable and out of reach.

The Federal Reserve Bank of Atlanta tracks a measure of housing affordability by comparing the median house price to the median income. Keeping that ratio below 30 percent is their target for affordability. By that measure, housing has been unaffordable nationally since early 2021 and over half the time since the start of 2005. (See chart above.)

Many current policies attempt to help aspiring homeowners through subsidies. These demand-side policies, which include federal loan guarantees, special tax treatment for borrowers, and down payment assistance or tax credits for first-time homebuyers, serve only to push up prices on existing houses and provide limited incentive to increase new construction.

The key to making houses affordable again is the implementation of supply-side policies that put more housing units on the market. These supply-side policies include (among others) both relaxing zoning rules to allow for more construction and streamlining building permits to reduce costs for homebuilders. By making it easier and less costly to build, these reforms would increase the overall supply of homes and make the American dream of homeownership affordable for young families.