STEPHEN MOORE: This Is No Way To Gimme Shelter

Americans today are justifiably angry about the price of rents and mortgages. Home prices have roughly tripled over the last 25 years, and the median home price is now $415,000.

The 30-and 40-somethings are having a tough time buying a first home. Young families may need to pay a whopping $75,000 on a down payment.

Democrats and some populist Republicans have convinced the Trump administration to pin the blame on institutional investors, including large banks, private equity firms, and hedge funds. The Trump administration is endorsing a proposal to prohibit these firms from buying homes and apartments.

This is a classic boogeyman solution that will make the housing shortage worse. The investment funds are an easy target, but they have never gobbled up more than a tiny percentage of the housing market. On average, less than 2.5% of homes are purchased by banks and speculative investors. How can that tiny market share be blamed for a near doubling in home prices?

The houses don’t disappear when investors buy them. Investors often renovate and upgrade the fixer-upper houses and then place them on the market for a higher price. Why should this be illegal?

Banning these acquisitions ignores the main reason home prices are rising so rapidly. The supply of new homes is constrained by “not-in-my-backyard” zoning laws and affordable housing bans. These laws artificially reduce the supply of new homes and hand a windfall benefit to incumbent home owners by artificially inflating their property values.

These rules violate private property rights of landowners and shrink the supply of homes. This benefits baby boomers at the cost of their children. Those laws should be invalidated.

The government-inflated value of homes was made worse by the Biden administration, which gave us 40-year-high inflation and the fastest jump in interest rates in just as long. Biden’s regulatory agenda just added insult to injury because it drove up the cost of building homes even further. Trump’s tariffs on lumber, steel and aluminum are driving up new home prices too.