The media is currently mourning the potential death of a "bipartisan" housing bill, painting the conservative opposition as heartless obstructionists who hate the middle class. They want you to believe that if we just tweaked a few tax credits and shook hands across the aisle, the American dream would suddenly become affordable again.
They are lying to you. Building on this idea, you can find more in: The Childcare Safety Myth and the Bureaucratic Death Spiral.
The bipartisan consensus on housing is not a solution; it is a managed decline. Most of these bills are designed to subsidize demand while pretending to fix supply. When you subsidize demand in a supply-constrained market, you don't lower prices. You just transfer taxpayer money directly into the pockets of the people already selling the houses. This isn't a housing policy. It’s a bank bailout with a picket fence painted on the front.
The Supply Myth and the Regulatory Trap
The "lazy consensus" suggests that we have a simple shortage that can be fixed with tax incentives for developers. This ignores the structural rot at the local level. I have sat in zoning board meetings where a single "concerned citizen" blocked a fifty-unit complex because it might shade their prize-winning petunias. No federal tax credit fixes a "Not In My Backyard" (NIMBY) culture that has weaponized environmental impact reports to prevent a single brick from being laid. Experts at Harvard Business Review have provided expertise on this matter.
The proposed bill hints at "encouraging" local governments to reform. Encouragement is code for "we have no teeth." Unless a bill threatens to strip every cent of federal highway funding from municipalities that refuse to upzone, it is a performative gesture. We don't need "incentives" for affordable housing; we need to make it illegal to forbid its construction.
The Subsidized Demand Death Spiral
The most dangerous part of these bipartisan "solutions" is the obsession with down-payment assistance and expanded credit. It sounds empathetic. It feels like helping. In reality, it is economic arson.
Imagine a scenario where ten people are bidding on one house. They all have $50,000. The house sells for $500,000. Now, the government steps in and gives everyone a $25,000 "first-time homebuyer grant." Now, those same ten people are bidding on the same single house, but they all have $75,000. The house doesn't stay at $500,000. It jumps to $525,000—or higher, because the expectation of "free money" baked into the market drives speculation.
The buyer is no better off. They still have the same debt-to-income struggle. The only winner is the seller and the mortgage originator who now collects interest on a larger principal. By opposing these bills, the "obstructionists" are accidentally doing the right thing for the wrong reasons. They aren't stopping progress; they are inadvertently pausing a feedback loop that has tripled home prices while wages remained stagnant.
Why "Affordable Housing" Units are a Scam
The bill leans heavily on the Low-Income Housing Tax Credit (LIHTC). I’ve seen developers' books on these projects. To get the credits, they agree to set aside a percentage of units for "low-income" tenants for a fixed period.
Here is the dirty secret: the cost to build these "affordable" units is often higher than market-rate housing because of the sheer volume of red tape, prevailing wage requirements, and bureaucratic oversight required to trigger the credits. We are spending $600,000 of public and private capital to build a single unit of "affordable" housing that would cost $250,000 if the government just stayed out of the way.
We are subsidizing inefficiency and calling it social justice.
The Institutional Investor Boogeyman
The popular narrative blames BlackRock and institutional investors for buying up all the starter homes. It’s an easy target. It’s also a distraction.
Institutional investors own less than 5% of the single-family rental stock nationwide. The real "villain" isn't a shadowy corporation in a glass tower; it’s your neighbor who owns three "passive income" properties and uses a HELOC to outbid a young couple on a fourth. It’s the millions of "mom and pop" investors who have been told that housing is a risk-free asset class that the government will never allow to fail.
The bipartisan bill does nothing to address the "financialization" of the roof over your head. In fact, by stabilizing the market with subsidies, it signals to investors—large and small—that the floor will never drop. When the government guarantees that housing prices will only go up, housing stops being a place to live and becomes a speculative commodity. You cannot have "affordable housing" and "housing as a great investment" in the same economy. They are mathematically at odds.
The Truth About Interest Rates
Critics of the opposition claim that we need this bill because high interest rates have "locked" the market. This is a fundamental misunderstanding of how markets heal.
High interest rates are the cure, not the disease. For a decade, we lived in a fantasy world of 3% mortgages. That "cheap" money was immediately priced into the cost of the home. Now that rates have normalized to historical averages, sellers are holding out, hoping for a return to the era of free money.
The bipartisan bill seeks to grease the wheels of a broken machine. It tries to make 7% rates feel like 3% through clever accounting and credits. This prevents the necessary price correction. For housing to be affordable, prices must come down. For prices to come down, people must be forced to sell at lower valuations. Any bill that tries to "help" buyers without hurting sellers is a mathematical impossibility.
Stop Asking the Wrong Questions
People often ask, "How can we make it easier for people to buy homes?"
That is the wrong question. It assumes the current price is valid and just needs a bridge. The real question is: "How do we make it harder for housing to be an investment?"
If you want affordable homes, you have to:
- Abolish single-family zoning. Not "study" it. Not "incentivize" changes. Ban the restriction of density by federal fiat.
- Eliminate the Mortgage Interest Deduction. It is a multi-billion dollar subsidy for the wealthy that inflates home values.
- Tax land, not improvements. Shift the tax burden to the value of the dirt, forcing speculators to develop or sell underutilized lots.
- Stop the subsidies. Every dollar the government puts into a buyer's pocket ends up in a seller's bank account.
The Cost of "Success"
The downside of my approach is clear: it involves a massive loss of "paper wealth" for the current middle class. If you successfully make housing affordable, you are by definition lowering the net worth of every current homeowner.
This is why no "bipartisan" bill will ever work. No politician—conservative or liberal—wants to tell their voting base that their primary asset needs to lose 30% of its value so their children can afford to live in the same zip code. They would rather pass "affordability" bills that don't work than face the reality of a deflating bubble.
The opposition to this bill isn't a tragedy. The tragedy is that the bill exists at all. It is a placebo prescribed to a patient who needs surgery. It offers the illusion of action while protecting the very structures that created the crisis.
If you are waiting for a bipartisan consensus to save you, prepare to rent forever. The system isn't broken; it's working exactly as intended to protect equity at the expense of entry. Stop looking for "credits" and start looking for the people who make it illegal to build.
Burn the zoning codes. Kill the subsidies. Let the prices fall.
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