We are “supply-siders” because we believe that solving almost all economic problems can be solved by increasing the supply and production of goods and services.

The housing shortage in America is almost all a result of government regulation. We are members of the Rational Optimist Society (because we are rational and we are optimists) and they have provided a good explanation of how the government manufactured the current housing crisis in America:

It takes longer to build a house today than it did in 1971. Did we forget how to hammer nails or pour concrete? No. We let regulations get out of control.

In San Francisco, regulations add about $400,000 to the cost of building a single apartment. $400,000! Just to get permission to build.

The shakedown starts with a $50,000 environmental impact study that often takes 18 months–longer than it took to build the Empire State Building. Then comes the mandatory neighborhood meetings at $25,000 each.

California wins the gold medal for regulatory madness. But New York, Boston, and Seattle aren’t far behind…

Well, homes haven’t gotten more expensive to build. Construction costs, adjusted for inflation, have barely changed in decades. It’s the regulations.

We know this because, in America, most housing regulations are local. Some places still let builders build. Take Austin, Texas. It’s green-lighting new homes faster than any major city. Rents dropped 7%+ in the past year while prices soared elsewhere.

It’s not rocket science. Just let builders build.

One estimate suggests housing prices would drop by half nationwide if we simply let builders build until prices fell to near actual construction costs. Imagine cutting your biggest expense in half.

But the real gain would be a human one. My wife has thoughts on why people have fewer kids these days. “A bird doesn’t lay eggs without a nest,” she says.

In other words, build more homes and Americans will have more kids!