Inequality, not regulation, drives America's housing affordability crisis

Maximilian Buchholz, Tom Kemeny, Gregory F. Randolph and Michael Storper

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: A popular view holds that declining housing affordability stems from regulations that restrict new supply, and that deregulation will spur sufficient market-rate construction to meaningfully improve affordability. We argue that this ‘deregulationist’ view rests upon flawed assumptions. Through empirical simulation, we show that even a dramatic, deregulation-driven supply expansion would take decades to generate widespread affordability in high-cost U.S. markets. We advance an alternative explanation of declining affordability grounded in demand structure and geography: uneven demand growth – driven by rising interpersonal and interregional inequality – is the primary driver of declining affordability in recent decades. For cost-burdened households, trickle-down benefits from deregulation will be insufficient and too slow.

Keywords: housing; affordability; zoning; inequality; cities (search for similar items in EconPapers)
JEL-codes: R21 R31 R38 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026-01
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