Housing
Housing is generally the biggest investment Americans will make. Median house prices have markedly outpaced average wages, making it harder to buy a home. A 2024 Harris Poll found that 42% of Americans–and 46% of Gen Z Americans–believe that they will never be able to afford a house they really love. The data supports their fears. Don’t Quit Your Day Job reports that the median value of a home was $229,239.96 (CPI-adjusted price) in January 1980 to $423,797.74 in January 2025–an 84% increase. By contrast, they report that median household income, adjusted for inflation, rose by only 18%, from $70,828 in 1980 to $83,592 in 2025. This equates to a price-to-income ratio of 3.2 in 1980 to 5.1 in 2025. Analysis by the Joint Center for Housing Studies of Harvard University found that prices increased markedly following the COVID-19 pandemic, with higher prices in metro areas.
These worries are profoundly shaping life choices, which affect American society. A study published in Coldwell Banker’s 2025 American Dream Report found that 71% of aspiring homeowners are delaying life choices such as getting married, having children or making career changes until they can afford to buy a home. Analysis by the CDC found that births rates declined by 14% between 1990 and 2023, and that more women are waiting to have children. 30.1% of women giving birth were 30 years or older in 1990, compared to 51.4% of women in 2023. The proportion of married households also fell during this time, from 55% in 1990 to 47% in 2025. Research by Seung Hyeong Lee and Younggeun Yoo found that young people are also changing their relationship with money. Rather than saving for a home, many are consuming more relative to their wealth, reducing their work effort and taking on riskier investments such as cryptocurrency.
Reducing house prices is ultimately linked to spreading demand and lowering the cost of construction. There are several approaches, including those below:
Build more homes:
There is bipartisan consensus that housing shortages–especially in high density cities–are driving up prices. The Center for American Progress notes that housebuilding fell markedly in 2008 and has not recovered, despite years of steady growth. At the same time, their analysis estimates a shortage of 2 million homes nationally. This shortage spiked in the COVID-19 pandemic in 2020, driven largely by pent-up households, which are households that would have formed if housing was more affordable. They note that structural factors, such as zoning restrictions (e.g. for multi-family homes and mixed-use sites for residential and business), rising construction costs and slow permitting contributed to the shortage. Research by Christopher Elmendorf, Clayton Nall and Stan Oklobzija shows that building more homes can be politically controversial, as voters do not see the benefits for their communities, and blame developers and landlords for high prices. However, they do believe that voters can be persuaded with more information about the economics of housing.
Incentivise Geographic Spread:
In addition to increasing capacity in high density (and high cost) areas, policymakers should also encourage economic development in low density (and low cost) areas. As the map below from the National Association of Realtors shows, there is wide variation in median house prices across the United States; these range from $49,050 in Todd County, South Dakota to $1,700,990 in Nantucket County, Massachusetts. Higher median house prices tend to be concentrated in areas considered hubs for influential industry sectors: New York City for finance and the media; Boston for education and life sciences; Washington, DC for federal government services; Los Angeles for film and entertainment; and Silicon Valley for technology.
Encourage efficient and innovative house design:
Brian Potter and Chad Syverson note that building costs comprise 60-70% of the cost to bring a new house to market where land is not scarce. It therefore follows that lowering the cost of building a house can lower the cost needed to purchase the house. Most houses today are built on site from the bottom up. However, components for homes can also be manufactured off site and then assembled on site.
The Joint Center for Housing Studies of Harvard University found that manufactured housing offers a significant cost advantage through economies of scale in purchasing, production and installation. US Census data shows that the average manufactured home cost $123,300 in 2024, compared to $405,939 for site-built homes (excluding land). Manufactured homes come in a range of designs, such as “trailer homes” on wheels, log cabins, and Crossover Modern Homes (CrossMod homes) that resemble site-built homes and qualify for traditional mortgages (unlike other manufactured home types). An example from Champion Homes is shown below.
According to the Urban Institute, production of manufactured housing peaked at over 300,000 units per year in 1999 before falling to 50,000 units in 2012; they report that the decline was largely driven by a combination of overproduction and loosened credit standards that resulted in homes going to people who couldn’t afford them. This created a surplus of homes that dampened demand for new homes. However, demand increased from 2012, reaching 103,314 units shipped in 2024 according to Manufactured Home News.
The Urban Institute identified three factors that impede access to manufactured homes. First, restrictive zoning ordinances have made it more difficult to have a manufactured home. Examples of ordinances include outright bans of manufactured homes or requiring them to be placed on larger lots than site-built homes. This made it more difficult to create manufactured home communities, especially near good schools, jobs and transportation. Second, most manufactured homes lacked access to mortgages available to site-built homes; in 2016, 83% of manufactured homes were classified as personal property (chattel), which tend to have lower balances, shorter terms (10-20 years) and fewer underwriting requirements. Third, manufactured home values do not appreciate in the same way that site-built homes do.
A further restriction is that federal regulations–in place since 1976–require that manufactured homes (except CrossMod homes) have a steel chassis. This is the frame on which mobile homes are assembled and delivered. Pew Research notes that the steel chassis increases the price of manufactured homes by 9% of the average single-section home cost. They add that only 5-7% of manufactured homes are moved, which means that the chassis adds little value. This would also make it easier to qualify for mortgages, which increases access to affordable financing and better consumer protection. It would also increase flexibility in designing manufactured homes–such as multi-level homes–that make them feasible options in more locations.
The bipartisan Road to Housing Act addresses many of the hurdles that impede housebuilding, including for manufactured homes. It was approved unanimously in committee in the Senate, but it needs full passage in the Senate, the House and the White House to become law and policy.