The White House has released a report estimating a 10 million housing shortage in the United States, attributing the deficit to regulatory burdens that have stifled construction over the past decade. The analysis, part of the Economic Report of the President, identifies regulatory costs, known as the 'bureaucrat tax,' as a significant barrier to homebuilding. These costs, including compliance with building codes, zoning approval fees, and other expenses, add over $100,000 to the construction of each home.
Economic Implications
The report argues that reducing these regulatory costs could spur the construction of up to 13.2 million homes, potentially adding 1.3 percentage points to annual economic growth over the next decade and supporting 2 million manufacturing and construction jobs. Home prices have risen 82% since 2000, while incomes have increased only 12%, creating a significant affordability crisis for middle-class Americans. This mismatch has become a top concern for voters under 40, particularly as mortgage rates have surged in the aftermath of the pandemic.
'I don’t want to drive housing prices down,' President Trump told his Cabinet earlier this year. 'I want to drive housing prices up for people that own their homes, and they can be assured that’s what’s going to happen.'
Policy Proposals
In March, President Trump signed two executive orders aimed at reducing regulatory burdens on home construction and making it easier for smaller banks to provide mortgages. The White House is also considering making federal funding to state and local governments contingent on reducing certain regulations, according to an unnamed administration official. The report criticizes green energy housing standards introduced during the Biden administration, arguing that they have further increased construction costs.
Despite these efforts, the administration has been slow to implement further measures to address housing affordability, as global issues such as the Iran war and tariffs continue to dominate Trump's agenda. The housing shortage remains a pressing issue for American workers and families, highlighting the need for regulatory reform to stabilize prices and increase home ownership.