Popular myths about housing markets
We are experiencing a significant housing crisis in the U.S. because we are not building enough homes to meet demand. This shortage is causing housing prices to skyrocket, with the median home price increasing by 43% in the past 10 years. Half of all homeowners and renters are struggling to pay for housing.
Experts across the political spectrum agree that we need to build more homes where they are most needed to alleviate the burden of rising housing costs. State-level reforms that are rooted in property rights are the most promising path to allow for more housing.
But first we need to come to a consensus on the root cause of the housing crisis—which means dispelling popular myths about housing markets.
Here are three of the most common myths.
Myth: Allowing others to build more diverse, denser types of housing will destroy equity for nearby homeowners.
Fact: Research shows that allowing for more diverse types of housing—such as accessory dwelling units (ADUs)—and increased density can increase the price of the property in the short term and have positive spillover effects to existing homeowners and nearby neighbors.
Myth: A key driver of rising home prices is big housing corporations that are buying up more homes than ever.
Fact: While it is true that large institutional investors—those who own 100 or more homes—are buying more homes than they have historically, they buy less than 2% of all homes today. Experts say this rise in institutional investing is a symptom of an already existing low supply of houses, not the problem in and of itself. As a housing shortage emerges, investors see an opportunity to put their money into something that will quickly increase in value and easily be sold for a profit.
Myth: Positive housing reforms require giving up local control of neighborhood character.
Fact: Voluntary restrictions on neighborhoods—such as those imposed by homeowner associations—can be respected while allowing those who choose not to form a group to be free to build as they please. For example, in Montana, new housing law allows ADUs to be built, but only on lots without voluntary land-use restrictions.
These are only three housing myths. There are far more—some of which our colleague Jim Burling talks about in his book Nowhere to Live—and no doubt new myths will pop up as politicians scramble to solve the housing crisis. An essential fact to remember is this: Our housing crisis can be solved only when we allow more housing to be built. Simply put, property owners must have more freedom to build. There is already an emerging bipartisan consensus on that—and if we knock down anti-housing myths that currently block the way, America can start building a path out of the housing crisis.
