Solving the Housing “Crisis”

There are many problems that, owing to political polarization, seem intractable.

The housing “crisis” is one. Since too many people want to use the “issue” to score “political points,” obvious fixes aren’t tried because they’re complicated.

There is no housing crisis. There are plenty of homes. Everyone should be able to get one.

The problem is that private equity is holding too many of them, as vacation homes, for lease, or for AirBnB. You can get more from a house as a hotel, occupied just a week or two, than you can on a lease.

The answer is straightforward. Change the tax laws. Encourage private equity to increase the supply of housing. Discourage private equity from holding houses for lease or rent. Encourage home ownership. Discourage second home ownership.

This must be done carefully, deliberately. Any sudden change in the tax laws could cause housing prices to crash. Even modest tweaks will get pushback from owners of existing homes, because for houses to become affordable their values must come down.

The tweaks can be revenue neutral. Take a little from here, put in a little there. But it’s complicated. A lot of study must be made beforehand. A lot of people must get into a room, with the aim of the process clear, and come to a negotiated solution.

It can’t happen when everyone wants to bash everyone else’s head in. It’s a job for experts, and expertise is in bad odor.

Two bad things will happen if we don’t act. Our kids won’t get housing they can afford. Over time, however, there will be too many houses, and a housing crash. The population of America isn’t growing. This should be obvious.

But when everyone is ready to explode, problems are easy to put off. When everyone is ready to explode, answers based on research and negotiation are impossible.

Turn down the heat and we can get somewhere. Keep adding fuel to the fire and nothing’s possible.