That’s what J. D. Vance argued in tonight’s debate. It’s silly nonsense.
We need housing where people live, and most people live where there are jobs. Most of America’s jobs are in cities where there’s no vacant federal land, and many of those cities are east of the Mississippi River, where there’s little federal land.
Most federal land is in the western states, far from population and employment centers. Land isn’t the problem, anyway.
There’s a housing shortage because residential construction came to a halt during the subprime mortgage crisis. That crisis was directly caused by Republican financial deregulation. Something similar happened in the 1980s when Reagan deregulated the savings and loan industry, leading to massive fraud and the ultimate collapse of that industry.
Houses and apartments are being built again, but it will take years for housing supply to catch up with population growth. The pace of homebuilding is constrained by labor shortages, made worse by the pandemic. Today builders are more dependent on immigrant labor than ever (see article here), and Republican anti-immigration policies would worsen the labor situation and slow down homebuilding (see story here).
While the primary cause of today’s housing shortage is the loss of several years of new construction, low turnover of existing housing is exacerbating the shortage of listings. In the wake of the 2007-2008 financial crisis, and again during the 2020-2022 pandemic, the government’s priority was saving the entire economy, not reviving the housing sector.
The Federal Reserve contributed to those efforts by slashing interest rates, which enabled those who bought homes at those times to get very low mortgage rates. When pandemic-induced inflation caught up with the economy, the Fed raised interest rates to bring inflation down, making mortgages more expensive.
Once again, larger economic priorities took precedence over housing. One of the knock-on effects of the interest rate seesaw is that homeowners with cheap mortgages will have to take out more expensive mortgages if they move, so they’re hanging onto their homes. This reduces the number of homes on the market.
What about housing affordability? Houses always go to the highest bidders, so people with higher-paying jobs, and workers getting the biggest wage increases, are in the best position to compete for the available listings.
To prevent homebuyers lower on the income scale from being priced out of the market, the best solution is bringing supply into line with demand, which means building more homes as quickly as possible. Any government programs that facilitate this, or help first-time buyers with financing, will be more effective than Vance’s federal lands scheme.
But mostly it comes back to the fact that federal land isn’t where the housing is needed. Vance’s panacea is an empty illusion.
Photo below: If you build here, will people come? Why would they, if the jobs are elsewhere?
