1381: The Housing Crisis | Skeptical Sunday

What It Covers

Jordan Harbinger and researcher Nick Pell dismantle the narrative that private equity firms like BlackRock are causing America's housing crisis. Using data from the Urban Institute, National Association of Home Builders, and National Association of Realtors, they trace the real culprits: zoning laws, regulatory costs, interest rate lock-in, and local building codes that collectively price out middle-class buyers.

Key Questions Answered

• •Private Equity Myth: The claim that private equity owns 20% of single-family homes is false. The Urban Institute, a left-leaning think tank, puts the actual figure below 4% nationally. While investors purchased 27% of homes sold in 2025, these are overwhelmingly small individual investors owning fewer than five properties — retirees, stock option recipients, and side-income landlords — not corporate giants buying entire neighborhoods.
• •Regulatory Floor Cost: Government regulations at all levels add roughly 24% to the final price of every new single-family home, according to 2025-2026 National Association of Home Builders data. On a $400,000 home, that equals $100,000 in regulatory costs before a single material is purchased. In high-regulation states like Washington, that floor exceeds $200,000; in California, it surpasses $150,000, making entry-level construction economically unviable.
• •Interest Rate Lock-In Effect: Homeowners with 3-3.25% mortgages have no financial incentive to sell, creating a frozen inventory. Median time in a home before sale has reached an all-time high of eleven years. The National Association of Realtors estimates each one-percentage-point drop in mortgage rates adds 5.5 million households to the buyer pool — but without supply increases, lower rates simply inflate prices further without solving access.
• •Aesthetic Zoning as Hidden Tax: Local building codes frequently mandate expensive cosmetic features unrelated to safety: required gable counts, brick-or-better ordinances covering 60-100% of exterior walls, mandatory mature trees, and design review boards that reject plans based on subjective "visual rhythm." These requirements add $15,000-$25,000 per home in some municipalities, and permit approval delays — Atlanta's took 40 weeks versus surrounding counties' 4 weeks — add another $20,000-$40,000 per unit.
• •Demand Subsidies Backfire: Government programs that increase buyer purchasing power without expanding housing supply reliably raise prices. California's Dream For All Act, a $288 million down-payment assistance program offering 20% grants, was fully depleted in eleven days and contributed to a 10% statewide price increase in a single year. A proposed federal $25,000 first-time buyer grant would likely produce the same outcome: more dollars chasing the same constrained inventory.
• •Renting vs. Owning Math: Across the top 50 U.S. metros, owning costs $900 more per month than renting a comparable property. In high-cost markets like Orange County or parts of the Bay Area, the ownership premium exceeds 300%. Only 12.7% of renters who want to buy can currently afford to do so, down from 17% pre-COVID. Among high-income earners above $150,000, renters-by-choice grew 20% between 2023 and 2026, preferring liquid market investments over illiquid real estate.