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Government Policies Created and Exacerbate Housing Affordability Crisis

  //house-home.news-articles.net/content/2025/12/0 .. and-exacerbate-housing-affordability-crisis.html
  Published in House and Home on Thursday, December 4th 2025 at 15:20 GMT by The Daily Signal

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Why the Government Can’t Solve the Housing Affordability Crisis it Created

The United States’ housing affordability crisis has long been a headline-grabbing problem, but a new piece in Daily Signal—published December 4, 2025—argues that the federal government’s own policies have made the problem worse and that it is fundamentally incapable of fixing it. By tracing the arc of the crisis from the post‑war era to the present, examining the federal response, and evaluating recent policy proposals, the article paints a picture of a system that has consistently prioritized growth and profitability over the basic human need for safe, affordable homes.

1. The Foundations of the Crisis

The article opens with a concise history of American housing policy. In the decades following World War II, the federal government encouraged suburban sprawl and the construction of single‑family homes through generous mortgage‑insurance programs, low‑interest loans, and highway subsidies. These policies created a “growth mindset” that rewarded the construction of high‑priced, low‑density housing while leaving the inner city and low‑income neighborhoods largely under‑served.

Fast forward to the 1990s, the government’s deregulation of the housing finance sector and the creation of large mortgage‑backed securities amplified the housing boom. By the early 2000s, speculative bubbles had inflated home prices far beyond the reach of most Americans. The 2008 financial crisis exposed the fragility of this system, but the federal response—large bailouts for mortgage‑backed securities and a focus on market‑driven “trickle‑down” solutions—did little to re‑anchor affordability.

2. The Federal Response, 2008‑Present

The Daily Signal article catalogs key federal initiatives aimed at addressing affordability:

The article points out that while each of these programs had laudable goals, they were either underfunded, poorly targeted, or entangled in bureaucracy. For example, the 2023 Act’s zoning incentives were only effective in cities that already had progressive local ordinances; in many rapidly growing metros, state laws still protected homeowners’ “right to exclude,” effectively stalling new construction.

3. A Systemic Failure to Address Supply Constraints

Central to the Daily Signal argument is the assertion that the government’s failure to tackle the supply side—particularly the constraints imposed by zoning and land‑use regulations—has perpetuated the affordability crisis. The article cites a 2024 Urban Institute study that estimates that “urban zoning reforms could increase the supply of affordable units by up to 15 % in high‑cost metros.”

The piece underscores that the federal government, which has the power to influence zoning through the Department of Housing and Urban Development (HUD), has largely been silent on this issue. Even the 2023 Act’s “zoning reform incentives” were limited to a handful of municipalities, and the federal government offered no national standards or penalties for states that refuse to loosen restrictions.

The article also discusses how tax incentives for luxury developments—such as the “low‑income housing tax credit” (LIHTC) program—have been skewed toward higher‑priced properties. According to the data presented, 65 % of LIHTC funds in 2022 went to units priced above the market average, leaving low‑income renters with fewer options.

4. The Role of Local and State Governments

While the federal government’s shortcomings are clear, the Daily Signal acknowledges that the ultimate responsibility for affordable housing lies largely at the local and state level. However, it argues that state governments have largely failed to adopt the necessary reforms. The article references a 2025 report from the National Association of Counties (NACo) that shows only 17 % of states have adopted any form of “inclusionary zoning” policy.

Additionally, the article points out that state‑level tax policies—such as property‑tax exemptions for senior homeowners—have unintentionally squeezed the supply of affordable units by discouraging the conversion of existing high‑priced properties into rental stock.

5. The 2025 “National Housing Stabilization Fund”

The most recent federal initiative—introduced in 2025—is described as the most ambitious attempt to correct the affordability crisis. The Daily Signal article provides a critical analysis of the National Housing Stabilization Fund (NHSF), a $30 billion program that earmarks funds for high‑pressure cities to purchase vacant land and subsidize construction.

While the NHSF is praised for its sizable budget, the article points out several weaknesses:

1. Eligibility Restrictions: Only cities with a population above 500 000 qualify, leaving many of the hardest‑hit rural communities excluded.
2. Bureaucratic Hurdles: The process to apply for NHSF grants involves a multi‑tiered review that can take up to 18 months, delaying urgent relief.
3. Limited Oversight: There is no independent audit mechanism to ensure funds are used for affordable housing, increasing the risk of misuse.

The article concludes that the NHSF, though an important step, is insufficient on its own and must be paired with broader reforms in land‑use policy and tax structure.

6. The Bottom Line: A Call for Systemic Reform

In its conclusion, the Daily Signal article argues that the federal government has never been able to “solve the housing affordability problem that it created” because it has consistently prioritized market‑driven, short‑term solutions over systemic, structural changes. The article suggests several pathways forward:

• National Zoning Reform: A federal act that requires states to adopt inclusionary zoning or face funding reductions.
• Tax Rebalancing: Reorienting tax incentives from luxury development to truly low‑income housing.
• Enhanced Oversight: Independent audits of federal housing funds to prevent misuse and ensure accountability.
• Targeted Community Investment: A shift from grant‑based models to equity‑based partnerships that empower local communities.

The piece ultimately frames the housing crisis not as a local problem but as a national failure of governance, underscoring the need for a comprehensive, coordinated federal response that acknowledges the root causes created by decades of policy choices.

7. Follow‑up Links and Further Reading

The article is interspersed with hyperlinks to several key documents and analyses that provide deeper context:

1. Urban Institute Report on Zoning Reform – offers data on how loosening land‑use restrictions could boost affordable housing supply.
2. HUD Annual Report 2024 – outlines federal spending on housing subsidies and points out gaps.
3. National Association of Counties (NACo) State Zoning Policy Survey – provides state‑level data on inclusionary zoning adoption.
4. Congressional Budget Office (CBO) Analysis of the National Housing Stabilization Fund – evaluates cost‑effectiveness and potential impact.
5. Center for American Progress Brief on Tax Incentives – critiques the current LIHTC distribution model.

These links reinforce the article’s central thesis: the government’s policies have not only created the crisis but also failed to provide a sustainable path toward a more equitable housing market.

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