PETER REX , FOUNDER AND CEO, REX
ON 2/17/22 AT 6:00 AM EST
A home is not just a home. It is an important check on government power. The simple act of owning property gives people a powerful interest in restraining the state, since they want to protect the foundation of wealth that home ownership builds. It also encourages them to oppose higher taxes, the large bureaucracy that such taxes would fund and government attempts to take property or restrict liberty by other means.
That's why it's so concerning that housing is getting harder to find and afford, especially for the working class. The future of freedom depends on reversing this trend—and the Republican Party must take up the cause.
The need for action is urgent. While home ownership rates have hovered in the mid-60-percent range in recent years, the future of housing is growing darker by the day. At least 5 million families who want to buy homes can't because of a lack of supply, and for at least 10 years, home builders haven't been able to keep up with demand. The dearth of new homes drives up prices, which have soared during the pandemic while incomes fell. Accounting for inflation, home prices have risen by nearly 120 percent since 1965, while incomes have only increased by 15 percent. If more new homes don't get built, existing homes will keep getting more expensive, pricing more people out of home ownership and causing frustrated Americans to lean more on government.
Millennials are a case in point. A staggering 70 percent of Americans between the ages of 23 and 40 who want to buy a home say they can't afford to, and those who can are doing so at a later age than their parents. At the same time, Millennials are rushing into the arms of government, with 7 in 10 saying they'd vote for a socialist. While many factors contribute to young people's embrace of statism, including the high cost and radicalization of American education, the lack of affordable homes surely plays a major role. Millennials, who increasingly comprise the working class, don't have the habits of freedom that accompany home ownership. And if the situation is bad for them, think how much worse it will be for Generation Z.
Republicans are best suited to tackle this crisis, although it should receive bipartisan attention. Philosophically, they are still the party of limited government, so they have a principled reason to make home ownership a priority. (Democrats, by contrast, generally benefit from unaffordable homes, because it encourages people to depend on expanded government programs.) Republicans broadly support deregulation and entrepreneurship, both of which are essential to making housing more available and affordable. The GOP should prioritize reforms that will unleash housing development, which is a proven path to increasing supply and lowering costs for would-be home owners.
This cause deserves Republicans' attention at every level of government. At the local and state levels, GOP lawmakers should champion zoning reform. Most cities severely limit higher-density homes, promoting single-family homes instead. Yet that necessarily makes it harder to expand housing supply—you can only build out for so long before you have to build up. Thanks to these limits, more and more cities are starting to look like Seattle and San Francisco, which brutally restrict development and consequently suffer from utterly unaffordable home prices. Republicans should push to repeal or reform zoning laws. They could point to Houston, Texas, which has no zoning laws and is one of America's most affordable cities for housing.
Equally important is rolling back the countless regulations that make houses more expensive to build and therefore more rare. It's estimated that local, state and federal mandates add almost 33 percent to the price of a new home. The burden of regulations has also grown by nearly 45 percent in the past decade alone. The GOP should make clear that it will slash the red tape that keeps home ownership out of reach, while encouraging entrepreneurs to create new ways to build affordable homes. Tech companies have largely avoided real estate, while manufactured housing companies face many government hurdles. They should be empowered to innovate, using revolutionary technologies like 3D printing.
Finally, Republicans should consider outside-the-box reforms that can profoundly affect the housing market. That includes making it easier to build highways, so people who live outside cities can get into them easier. It means expediting approval of driverless cars, which will lower the cost of transportation for daily commuters. It means exploring tunneling (think Elon Musk's Boring Company), which could free up land for homebuilding and speed up transportation over long distances. And it means deregulating financial uses of blockchain at the SEC, so that everyday people can buy property in smaller, cheaper chunks. Such reforms will make housing more available and affordable, since they'll broaden the places where homeownership makes sense. Republicans should sell them as such.
If the GOP doesn't do these things, it's doubtful anyone will. The general trend in housing is toward less entrepreneurship and more regulation, leading to less home ownership and more unaffordable homes. That path only pushes home ownership out of reach for rising generations of Americans, while simultaneously pulling the working class toward a greater dependence on and belief in government power. The Republican Party must prevent that future, which requires becoming the party of home ownership.
After all, a home is not just a home. It is a bulwark of American liberty.
Peter Rex is the founder and CEO of Rex, a tech, investment and real-estate firm.