In the 2026 arena of American politics, “affordability” as a “crisis” is being accepted by nearly every commentator – regardless of political affiliation. That is because the nominal price of residential homes outside of high demand urban metros have increased about 120 — 130% since 2000. And the same is true for the median 2 bedroom apartments, but those are nominal prices.
The inflation adjusted increases are closer to 35%, meaning the majority of the spike in prices were caused by various government policies, and we cannot really isolate which policy caused what spike.
But regardless of cause, “affordability” is being leveraged with great success by political candidates who will “fix” the problems caused by government policy by fixing the supply side with government policy. However, these are candidates with malice for the supply side — and for the principles of individual rights, political liberty and moral justice that animate the supply side.
In the long run, they will fail – and badly. But in the short run, it is best to understand the causes and decapitate their prospects for short-term success. And to that end, I will discuss two ideas for solving problems that have withstood the test of time – and do it in the context of policy pundits, private producers and political panderers. But first, the provable premises.
Provable Premises
My first premise is known as the Pareto Principle — or the 80/20 rule. The second is Ockham’s Razor — or the principle of parsimony. To be clear, these are not laws of nature or principles with universal application, but when used in the proper context, they are ideas for solving problems that have withstood the test of time.
Regarding the Pareto Principle, it was named for sociologist Vilfredo Pareto, formulated by engineer Joseph M. Juran, and he used it as a tool for understanding quality control and management systems. To clarify misunderstandings, Juran summarizes the rule as “the vital few and the useful many,” but to me, it is doubtful that applies to State bureaucracies.
Among other things, the 80/20 rule captures the primary sources for business revenue, productive time and mechanized efficiency: 80% of the revenue is earned by 20% of the sales force, 80% of productivity comes from the 20% of the time worked, and 80% of mechanical breakdowns are caused by 20% of system flaws.
Regarding Ockham’s Razor (named for 14th century theologian William of Ockham), it states that with competing theories for certain circumstances, the simpler explanation is the most likely. In other words, strip away the unnecessary ideas to solve a problem — the solution with the fewest variables is likely the best.
And the idea for essentializing all problems can be traced to other heroes of Western civilization such as John Duns Scotus, Maimonides, and Aristotle.
Policy Pundits
My third premise is prices rise when supply falls (other variables held constant). With that in mind, two Vanderbilt University law professors published an academic paper titled War Housing in July 2026. Written by Christopher Serkin and Daniel Sharfenstein, the concluding sentence to the fourth paragraph frames the problem this way:
“It is time to start acting like we are in an actual housing crisis and to explore policies that go beyond loosening zoning and hoping that private developers will satisfy our housing needs.”
Yes, Serkin and Sharfenstein are now jumping on the regulated supply bandwagon — and zoning restrictions add to higher prices and limited supply, but those have been around for decades. And if you’re going to zoom in on zoning, what about lending quotas, rent controls, property taxes, and tax credits? Those have also been around for decades and they all have the same primary cause: the government intrusion of central planning.
The fourth premise is that prices rise when demand rises (other variables held constant). Naturally, a growing population will increase demand, but the authors are critical of private developers who must deal with the trade tariffs, loan regulations, “green” construction mandates, and low-income quotas that impede their ability to increase supply. And those have been around for decades and have the same cause: the government intrusion of central planning.
Naturally, these two law professors at Vanderbilt University have a solution to the supply problem, but it is one that utilizes the 20% of flaws that trigger 80% of the problems:
“Taking the housing crisis seriously means focusing not just on deregulating land use controls but on activating the full arsenal of government tools and programs. We should return to a kind of war footing to solve our housing problems.”
In this 70 page report with 286 footnotes, Serkin and Sharfenstein characterize World War II federal housing agencies as “responsive landlords.” And with their newly discovered “sense of community,” federal authorities with no skin in the game seized their “opportunity to innovate” while “taking regional aesthetics into account.” Furthermore, the authors rely on housing activist Dorothy Rosenman who wrote in 1945:
“It is said that lumbermen, plumbing supplies houses, furnace manufacturers, electrical contractors, insurance companies, all unite in a witchlike profit dance around the unborn house . . . The root of the evil of excess costs does not usually lie with one individual. It lies mainly in the multiplication of uncoordinated interests, each with a separate ‘take’.”
Private Producers
These are the producers, suppliers, and competitors with skin in the game. They are concrete examples of a specialized economy that increases productivity, lowers prices, and provides housing options for the likes of Rosenman, Serkin and Sharfenstein. Furthermore, they are unassailable proof for my fifth premise: supply creates its own demand.
Without these producers, there is no government tax revenue, there is no government housing, and there are no law school professors writing papers extolling government housing projects that were never built, never built at scale, or were temporary prefab shacks. Or in the politically correct jargon of War Housing, “demountable.”
One of those affordable housing projects for World War II industrial workers was commissioned to famed architect Frank Lloyd Wright. These were four-apartment structures of prefabricated materials arranged in a “cloverleaf” pattern. The brilliant design allowed for privacy, sundecks, children’s play areas and garages in the center of each building — except for one minor detail — as reported by The Argument:
“No, because it doesn’t exist. According to Wright’s own account, Massachusetts architects were so annoyed at having been passed over for the project that they complained to their federal representatives. Unwilling to turn over his work to other architects, Wright then refused to sell his plans to the government and the Pittsfield project was never built.”
By extension, it seems that Frank Lloyd Wright was united in Rosenman’s “witchlike profit dance” and “the root of the evil of excess costs.” Or maybe it more accurately describes the political panderers in the White House and US Congress. That is the simplest explanation for the politically manufactured “housing affordability crisis.”
Political Panderers
Also in July of this year, the 21st Century ROAD to Housing Act became law. Proving that neither Democratic and Republican party loyalists will let a crisis go to waste, it passed the US Senate 85-5 and the US House of Representatives 358-32. At least it can be fun to parse the acronyms of these monstrosities — and in this case it is Renewing Opportunity in the American Dream.
And where was this American Dream manufactured? As Serkin and Sharfenstein’s paper tells us about the interwar period of the 1930s:
“The Department of Labor mounted “Own Your Own Home” campaigns, publicizing the National Association of Real Estate Boards’ efforts to attract new homebuyers. Social reformers believed that encouraging workers to become homeowners would increase productivity, decrease absenteeism, and give workers a stake in their communities.”
Essentially, the 2026 Housing Act bans large real estate investment companies — those with more than 350 single-family homes in their portfolio, from purchasing additional existing homes. Ostensibly, this creates supply for individual home buyers that would have been transferred to the rental market. At the same time, the Act does not prevent institutional investors from building new homes and adding to their rental portfolio or divesting any of their existing housing stock.
The way the policy pundits and political panderers tell it, developers and investors created the “housing affordability crisis” by not meeting consumer demands and by outbidding consumers for existing homes. But let’s cash the reality check. According to UBS Wealth Management:
When looking across the US, institutional holdings of single-family homes remain at about 0.35% of the housing stock and institutional investors only account for about 3.0% of single-family rentals (SFR), according to BofA. Large institutional players such as Blackstone only hold about 0.06% of single-family homes, and the majority of SFRs are actually held by local mom-and-pop landlords.
Pareto’s Principle
What the story above illustrates is that more than 80% of the illustrated problems are caused by less than 20% of the people — and they work for the government. As Springer Nature reports, public sector employment (federal, state, and local governments) represents 14.5% of the workforce. Yet, it is the other 85.5% that pay for everything and get the blame. Or as Rocky the Squirrel said, “Boy, they don’t call him Wrong Way Peachfuzz for nothing!” And Bullwinkle replied, “You mean they gotta pay?”
In 2024, Blackstone announced a $1 billion commitment to new single family home construction to complement their $10 billion investment in the United States and Canada. In 2024, Pretium committed $1.5 billion to its single family fund and has invested $2.6 billion since 2020 in its build to rent portfolio. And since 2020, Invitation Homes has invested almost $2 billion in build to rent and acquisitions.
As usual, the most likely explanation is the one with the fewest variables: independent producers with skin in the game earning profits driven by the price mechanism of free markets will fix the supply problem — only if there is one. But there is another message that market prices for residential housing are sending: owning a home is not a good investment and it could very well limit your choices for greater opportunities.
Prices are information. Prices send signals. Instead of complaining about prices, we are better served learning how they work and what they may be telling us.
