With American fertility rates in decline, ideas have emerged from both the right and the left about how governments can incentivize having children, or at the very least reduce some of the costs. Patrick T. Brown observes that the steady increase in the price of housing may be leading people to delay starting families, and argues that, as is so often the case, well-intended government interventions are the culprit:
In the wake of World War II, the United States adopted a type of industrial policy for housing—favorable tax treatment, federal assistance, a rejuvenated homebuilding industry, and easier financing led to exploding homeownership rates (of course, not every group benefited equally). . . . But by the 1970s, the great engine that had been powering the growth of the housing supply began to peter out. Two factors are of particular interest to our story: a regulatory climate that shifted from favoring development to protecting the environment, and the rise of what the Dartmouth economist William Fischel calls the “homevoters.”
First, the passage of the National Environmental Policy Act and state-level equivalents made it more cumbersome for developers to build. These laws were arguably well-intentioned, but the added years of environmental and legal review are inevitably capitalized into the price of a home. . . . Funnily enough, in the context of today’s concerns over the climate, the environmental laws championed by 1970s activists may be making it harder to fight carbon emissions. For example, in today’s legal climate, it’s easier for developers to build in Arizona or Nevada than the San Francisco Bay Area. As a result, more people move to hot, sunny areas that require intensive use of air conditioning rather than staying in more temperate areas like the Bay Area.
Second, the high-inflation environment of the 1970s, combined with the record-high rates of ownership, changed the mental framework around housing. For most people, a single-family home is the single largest purchase they will ever make. If a home continues to rise in value after its purchase, a homeowner can see the value of the house as both consumption (in the form of a place to live, make memories, etc.) and as investment. That means that homeowners have a rational, vested interest in seeing the value of the home maintain (if not improve).
A new road, apartment, or housing development changes the status quo, and even the most open-minded homeowner might be worried about taking a risk, even a small one, that his house could end up worth much less than what he paid for it.
Read more on Public Discourse: https://www.thepublicdiscourse.com/2023/07/89603/