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

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.