The debate over government involvement in the real estate industry is not new, but it has taken on renewed urgency as the housing crisis deepens across the United States. Vice President Kamala Harris recently pledged to build 3 million new homes if elected President. While offering tax incentives to contractors is a step in the right direction, the idea that the government should take the lead in building and managing these homes is deeply misguided. The government’s track record in housing is abysmal, and history has shown that when it comes to real estate, the private sector is far better equipped to meet the needs of the American people.
The government’s role should be to remove the regulatory barriers that stifle development, not to become a builder itself. Government-funded and managed housing projects have consistently failed, leaving residents in squalid conditions and communities in decline. Instead of repeating past mistakes, we should empower private developers to do what they do best: create, innovate, and build homes that meet the market’s needs.
The Government’s Failed Track Record in Public Housing
When the government steps into the role of housing developer, the results are often disastrous. Let us look at some of the most notorious examples of failed government housing projects:
- Cabrini-Green Public Housing, Chicago: This project was supposed to provide safe and affordable housing for low-income residents. However, it quickly became a symbol of urban decay and government failure. The crime was rampant, and the conditions were so dire that USA Today described it as “a virtual war zone, the kind of place where little boys were gunned down on their way to school, and little girls were sexually assaulted and left dead in the stairwells.” The government’s inability to manage and maintain Cabrini-Green led to its eventual demolition, but not before countless lives were negatively impacted.
- Pruitt-Igoe Public Housing, St. Louis: Pruitt-Igoe was another government initiative that turned into a disaster. Initially hailed as a modern solution to urban housing, the project quickly fell into disrepair. Essential systems like heating, electricity, and waste disposal broke down, and the government was unable or unwilling to fix them. The complex became unlivable, and eventually, it was demolished. The Pruitt-Igoe failure is a stark reminder that the government is not equipped to handle housing development and management complexities.
- Pink Houses, Brooklyn, New York: The Pink Houses in Brooklyn are yet another example of the government’s failure in housing. Residents complained that maintenance was only performed after a tragedy occurred. The situation was so dire that residents claimed, “Work does not get done until someone gets killed.” This is the reality of government-run housing: neglect, decay, and a complete lack of accountability.
These examples are not isolated incidents; they are part of a broader pattern of failure that underscores the fundamental flaws in government-managed housing. As the article “America’s Failed Experiment in Public Housing” from Governing.com points out, these projects often leave families “living in squalid conditions, trapped in segregated neighborhoods.” The government’s good intentions cannot overcome the inherent inefficiencies and mismanagement that come with bureaucratic control.
The Private Sector: The Real Solution to the Housing Crisis
We need to turn to the private sector to solve the housing crisis. The private sector is driven by market forces, competition, and innovation—all of which are essential to meeting the diverse needs of the housing market. However, the government must get out of the way for the private sector to succeed. This means eliminating the regulatory barriers that make it difficult for developers to build new housing.
One of the biggest obstacles to increasing housing supply is overregulating land use. Zoning laws, building codes, and other regulations often prevent developers from building the most needed housing types. In many cases, these regulations need to be updated and reflect the realities of today’s housing market.
According to an article by the National Association of Housing and Redevelopment Officials (NAHRO) titled “Rethinking Zoning to Increase Affordable Housing,” there are several key zoning reforms that could significantly increase the supply of affordable housing. These include eliminating single-family zoning, bundling zoning reforms, increasing density near transit, eliminating off-site parking requirements, and allowing accessory dwelling units (ADUs) and single-room occupancy housing.
These reforms would make it easier for developers to build the housing that America desperately needs. For example, allowing ADUs would provide more housing options for small families and single individuals while also allowing low-income homeowners to generate rental income. According to an article by AARP, “ADUs Are Good for People and Places,” communities that embrace ADUs benefit from increased housing diversity and affordability. However, these common-sense reforms are often blocked by a combination of government bureaucracy and elitist NIMBYism (Not in My Backyard).
NIMBYism: The Elitist Obstacle to Affordable Housing
One of the most significant challenges to solving the housing crisis is the pervasive NIMBY mentality that exists in many communities. NIMBYs oppose new development in their neighborhoods under the guise of preserving “community character.” However, they are protecting their property values at the expense of those who desperately need housing.
This elitist attitude is not only selfish but also profoundly harmful. By blocking new development, NIMBYs contribute to the housing shortage, driving up prices and making it harder for low- and middle-income families to find affordable homes. The irony is that many of these same NIMBYs already enjoy the benefits of stable housing, yet they are unwilling to extend those benefits to others.
Ronald Reagan once said, “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.” This statement rings particularly true when it comes to the housing crisis. Government intervention in the housing market has only made things worse, and NIMBYism has compounded the problem. It is time to acknowledge that the government is not the solution to our housing woes—if anything, it is part of the problem.
Why the Government Should Stay Out of Building
Given the government’s abysmal track record in public housing, it is clear that it should be outside the business of building or managing homes. Government-run housing projects are plagued by inefficiencies, cost overruns, and substandard living conditions. Moreover, these projects are often politicized, with decisions made based on political considerations rather than the needs of the community.
On the other hand, private developers have a vested interest in the success of their projects. They are driven by the need to create desirable, marketable housing that meets consumers’ needs. This competition drives innovation and efficiency, leading to better outcomes for residents.
However, the government must step back for the private sector to succeed. This means eliminating unnecessary regulations and allowing the market to function freely. Reducing the regulatory burden can increase the housing supply and make it more affordable for everyone.
A Call to Action
The housing crisis in America is real, and it requires immediate attention. However, the solution is not more government intervention. Instead, we should look to the private sector to lead in building the housing that America needs. The government’s role should be limited to removing regulatory barriers and providing incentives for development, not stepping into the role of builder and manager.
As we have seen from the failures of government-run housing projects, the government is not equipped to handle the complexities of the real estate market. These projects often lead to substandard living conditions, increased crime, and community decline. The private sector, driven by market forces and competition, is far better suited to meet the diverse needs of the housing market.
It is time for policymakers at all levels of government to recognize this reality and take action. We must eliminate outdated zoning laws, reduce regulatory barriers, and allow the private sector to build the housing that America desperately needs. Doing so can increase housing availability, lower prices, and provide more options for all Americans.
Government intrusion cannot solve the housing crisis. It requires a market-driven approach that empowers developers and contractors to build the homes Americans need. It is time to let the private sector do what it does best: create, innovate, and build a better future for all of us.
If you believe the government should step back and allow the private sector to take the lead in solving the housing crisis, please contact your local and federal government officials. Tell them it’s time to reduce regulations, incentivize development, and let the free market work. Together, we can create a housing market that works for everyone, not just those who can afford to navigate the maze of government regulations.
John G. Stevens is publisher of Weekly Real Estate News
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I agree with you 100%
Good essay with conclusions that are well supported by the data, theory and practice.
Ironically, the current Harris big-government proposals for housing run contrary to the 2019 “Housing Emergency” declaration made by her friend Gov. Newsom of CA, and the dozens of laws passed by CA since then to support higher, and less costly, housing production.
Few states prove the deleterious impact of government regulation on housing better than CA. After decades of building layers of regulatory impediments and excessive development fee structures to feed bloated government and pacify NIMBYs, CA has been forced to acknowledge the clear fact that government has caused the problem of housing shortages and excessive costs.
As with the Biden-Harris misguided, and ironically named, “Inflation Reduction Act”, or “student loan forgiveness”, burdening U.S. taxpayers with higher federal debt so the govt. can borrow more money from all taxpayers to give away to a chosen few, will only exacerbate the problems of inadequate supplies and bloated costs.
And, as demonstrated by the success of the Trump-Tim Scott “Opportunity Zones”, federal and state tax policies can be used to incentivize new development that boosts private sector investment and supply of new product, while improving the quality of housing stock and adding more jobs. Even CA’s limited reduction of development regulations is bearing fruit in the form of faster housing production.
There is no need to increase the U.S. debt and give away federal money; just let developers and investors keep more of what they earn and make the development process quicker and more user friendly. Simultaneously, reduce the burdens of government so people can save enough for a down payment.
Harris has never had a private sector job nor built anything other than wasteful government bureaucracies. And, her ideology is more closely aligned with the big-government, centralized command and control structure of her VP’s favorite country – China, than with a free and democratic economic system. She and her associates lack the free-market philosophy, knowledge and experience to solve the problem.
The key to more affordable housing supply, is less government regulation and lower federal debt that will lead to lower mortgage rates. Once again, too much government is the problem.
Amen! Thank God someone is speaking up. The government allowed and therefore caused the crash of 2008 and the welfare state has been a crime against humanity playing out in blue cites across America every day. Government (which has caused every problem it says it needs to fix) IS the problem. We need to get some Democrats back on board like they were in the 1960s sounding the alarm about communism and socialism.
The new NAR regulations is another example of government stepping in to dismantle the way Real Estate sales has been done for decades. Buyers are now on the hook, sellers are given a break but what Realtor will be willing to work for zero income if the buyers can’t afford to pay or refuse to? The only people who will profit are the attorneys who will make millions! I’ve been a Realtor for nearly 20 years and NAR failed its $1.5 million members. Compensation has always been negotiable and I’ve given up part of my compensation many times to make a transaction work.
Agreed and VERY well written.
The challenge with the vast majority of policymakers is that they consistently put out ideas based on the amount of votes they can muster up and not on data and professional input from the people that are actually on the ground.
Great read.
I believe the difference is Harris is proposing incentives and not government housing. She is also promoting housing incentives to buyers. Quoting Reagan doesn’t help. He was a orator only and horrible for middle class Americans. Too many bad apples in the industry to rid oversight and regulations. You quote stats re: government housing but mention nothing of those in the industry that contributed to failed housing via bad deeds and less than par industry standards. Type of government aid is the key. Changes needed. Totally disagree with your comment.
Totally agree with you. Also, the private sector’s solution is to cater to the wealthy and force those who are not wealthy to live in circumstances never before promoted. Currently, in Los Angeles, when you look up decent priced rentals in clean newer buildings, or remodeled buildings, you’ll find something I’ve never seen before, Ie: “1 Bedroom, $1500!” We’re talking WeHo, BH areas. How affordably exciting! When you call, you’re informed they are renting literally just 1 bedroom, in a 4 bedroom unit. You don’t get to pick your roommates. The guy on the other end of the line says, “You have a lock on your door!” … … … Meanwhile, a home a family could use is rented out in pieces by the “private sector,” who have no interest in helping the homeless, or families, or helping anyone find affordable housing. Not only is it not safe to blindly rent a room with strangers, it’s an affront to the idea of American independence, home and family.
CJ
Agree with you. Let’s. Not forget the greed in the private sector!
CALL TO ACTION – Use this link to find your representatives:
https://www.congress.gov/members/find-your-member
I think the notion that a Harris administration would actually have the government contract for/build/own the houses is misguided. The government doesn’t even build the housing on military bases. My market needs more housing. Prices are still going up and quickly. We are anticipating 50,000 new residents in the next decade. Something has to give. Restrictive zoning and builders building bigger and bigger houses (read more expensive) are the fundamental obstacles. Everyone wants to equate affordable housing with subsidized housing. They are not necessarily the same thing. Some of the fastest selling houses in my market are smaller homes, generally 1000sf- 1800sf, They are also the ones increasing in value the most, and the most in demand. But they are also older homes and few are found on the periphery of growth.
Agree
How about getting “Wall Street” out of housing? Tens of thousands of entry level housing are now owned by hedge funds and many new subdivisions are being sold entirely to hedge funds. First time buyers and low income buyers cannot compete in these cash offer deals. Congress either needs to give them a tax incentive to disgorge themselves of these properties or they need to take away the tax incentives they curently enjoy to put tens of thousands of entry level housing back in stock.
Totally agree!
Yes. Thank you! If people want to buy apartment buildings to get into the rental market, fine. There’s plenty of things hedge funds can invest in that don’t include destroying the housing market for would-be homeowners.
That is absolutely correct! Sad to hear these partisan comments with no real solutions mentioned on this platform.
A very partisan take. Not clear that VP Harris intends for the gov’t to build 3 million houses. Even if so, government can’t build anything? Oh, except roads, bridges, airports and other infrastructure.
And government is bad, except when it gives developers tax incentives and fist time buyers downpayment cash? “NIMBY” owners are selfish? Some maybe, but many just want to protect their single biggest investment, which is understandable. You think Trump and his rich supporters want ADU’s and apartments in their neighborhoods? They are the selfish ones, selling their souls for another tax break. You think Trump cares about housing prices other than as an election issue? He LOVES high housing prices. He has actively campaigned with racist images of what will happen to your neighborhood under KH:
https://abcnews.go.com/Politics/trump-campaign-faces-backlash-after-posting-images-side/story?id=112831279
I prefer market solutions too, but lets not go down the road of all government is bad, all private sector good. Let’s figure out what works, there is no one solution that fits all.
Excellent comment! Totally agree
Nothing else to say…just, yep.
Like you say, our system is based on market demand and innovation to provide the needed products. I fully agree that government has no place as the provider in competition with free enterprise. Government has put its own misplaced needs in regulations blocking those who would innovate to provide housing. National and local governments, regardless of party, over-regulate the building process, the zoning process, limit ADU’s, and create other interference to the detriment of free enterprise.
NIMBY’s actually do have the right to lobby for their own self interest as well. No one wants their property values to plummet, but well managed higher density properties are not a detriment. Just don’t rely on government to manage anything. Allow the zoning and let free enterprise determine the feasibility. You can’t force it.
Government and private companies both own large inner city properties that are underused or vacant. Some are realizing that an investment to refurbish or repurpose these properties can go a long way towards providing affordable housing and a revitalized city center. Government could sell these properties off to private equity companies and entreprenuers if the zoning and tax incentives permitted profitable reuse.
Oh, and “affordable” is a two way street. Pay people a living wage.
The 67% of the country that owns their own home don’t ever want to see their values go down. That flawed rhetoric must stop.
Thanks for the well written article that presents a great case for “good intentions” making awful policy!
There are some merits in the article, however, failing to mention the failures too that are possible in the private sector makes it one sided in favor of a private sector with only pure motive (no greed factor). For instance, the Trump organization, Kushner Companies received government money for middle to low income families, but charged punitive fees at times, and not to forget racial profiling.
Let’s keep on our critical thinking caps for real solutions to the housing crisis.
All of the above!!!
Redistribution never works, it failed and every communist country there is. Overregulation causes the cost to sore in states like California or housing approaching $1 million each.
These idealists, who think that capitalism is bad and that earning a living and making some profit is not needed, the government can just do everything, are not realistic. Reduce regulations have common sense laws the law builders to build and not spend thousands if not 100,000 or more to build a single home. And $1.2 trillion with the giveaways is still have to be paid every single penny by working taxpayers. I just can’t help, but think Kamala thinks she’s Evita!
Double their salaries, triple their salaries, and how did that work?
Let’s not forget what happened in 2008 when we let the free markets run amuck:
From the Financial Crisis Inquiry Report:
“While the vulnerabilities that created the potential for crisis were years in the making, it was the collapse of the housing bubble-fueled by low interest rates, easy and available credit, scant regulations, and toxic mortgages-that was the spark that ignited a string of events, which led to a full-blown crisis in the fall of 2008…
We conclude the financial crisis was avoidable.
We conclude widespread failures in financial regulation and supervision proved devasting to the stability of the nation’s financial markets.
We conclude dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.
As a nation, we set aggressive homeownership goals with the desire to extend credit to families previously denied access to the financial markets. Yet the government failed to ensure that the philosophy of opportunity was being matched by the practical realities on the ground.”
The 2008 housing market crisis / collapse was not caused by the “Free market run amuck”. It was caused by our elected “leaders” -as you stated above – fueling low interest rates and easy credit, scant regulations that lead to toxic mortgages. Our elected officials – thru the quasi private Fannie and Freddie decided everyone could / should qualify for multiple home loans – with no proof of income. Throw those no income mortgage loans in the same bucket as well qualified mortgages and the entire bucket starts to stink quickly! No one will touch them. No worries, they are backed by the US government to drive interest rates down.
Zero down and cash back at the closing? That will end well!
If / when the government gets involved with housing for political gain as they appear to be positioning to do, again, it will create another false market that will not end well – again….
330 million people….
These two options for 2024???
We must demand better!
We need a reset….
When your govt allows millions of illegals from largely third world countries come in freely over decades, you’re going to have a housing problem. Then this same govt wants to provide housing for them in your neighborhood-that’s where NIMBYism comes in. Here’s where the govt can help: cut off the freebies to illegals, many will self deport, then implement mass deportations then the economy will improve and thus the housing mkt.
Turn to private section? Which one? Corporations/ hedge fund purchased 200,000 homes in 2011 to 2017 based on one estimate then some more up to 2022. Corporations paid cash or pay above asking prices, jack up the valuation, tax basis and screw over the first time home buyers. I am all ears on solutions.