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Why Are Houses so Expensive? Zoning, Mortgages and Cheap Money

We all want the same thing — to own our own home, condo, townhouse, whatever. Why don’t we? It’s Millennial economics: We don’t have the money. Housing prices have doubled since 1970. Why are houses so expensive? Well, that has a lot to do with politics.

Zoning issues

First, local governments like to tell people what to do and where not to build. But this results in thousands of places across America limiting building, which causes prices to go up. People who already own their homes love these restrictions because it makes their homes more valuable. The rest of us can’t afford to buy into the neighborhoods where they grew up and call home.

Inflation and rising prices

Next, let’s talk about how the government makes cheap money. In Washington, we all know the government is always broke. To keep funding political promises, the Federal Reserve prints money. More money means everything becomes more expensive, especially houses and construction materials. (See: Inflation.)

We can’t afford a down payment.

Lastly, we can’t forget mortgages: loans for buying a house that are mostly backed by the federal government. Mortgages increase prices because people are able to borrow at very low interest rates. But most people are paying too much in rent to afford a down payment.

Society of renters

So, we’re becoming a society of renters. How do we make housing prices more affordable? We need updated zoning laws, better governmental policy and more achievable mortgage programs. Let’s give millions of our fellow Americans who have been locked out of the housing market a chance at stability and prosperity. We need more Millennial wealth, but we need some help here!

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