The Fed can’t issue a building permit |
A lower mortgage rate may help a family afford a house, but it will never solve America’s housing affordability crisis. That is because the price of borrowing is only part of what determines whether a family can afford a home. The other side of the equation, which Washington has neglected for too long, is whether we allow enough homes to be built in the first place.
Yet, much of the national housing debate continues to revolve around the Federal Reserve. Every movement in mortgage rates is treated as a verdict on whether affordability is improving or deteriorating, while far less attention is paid to the zoning restrictions, permitting delays, regulatory costs, and financing obstacles that determine whether new housing ever makes it out of the ground.
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Congress has finally begun to address that imbalance. The 21st Century ROAD to Housing Act, which became law in July, takes meaningful steps toward removing barriers to construction and expanding the ways people can build and finance homes. Its passage was an important achievement, but it should be viewed as the beginning of housing reform, not the end.
There is no question that interest rates matter. Higher borrowing costs put pressure on household budgets, make development more........