Building Housing Requires Thinking Inside the Box
How America can build and afford the housing we need.
Washington imagines the economy as a box. You put money in one side and houses come out the other. The “market” is the box. Nobody’s quite sure what happens inside it, and nobody in charge thinks it’s their business to ask. The government stands off to the side with two moves it’s allowed to make. It can add a rule or it can take one away.
That’s the whole debate over housing. One side says take the rules away. Knock down the zoning, kill the reviews, let people build. The other side says put more money in. Subsidize the buyer, fund the voucher, finance the project. They sound like enemies. They’re running the same machine. Both of them believe the box is full. Both believe that somewhere inside it sits all the lumber and steel and labor we could ever need, idling, waiting for the right signal to wake up.
They’ll think outside the box. They’ll think around it. They’ll spend whole careers on the dials bolted to the front of it. The one thing they won’t do is open the lid and look inside, because inside is the only place the answer lives, and what’s in there frightens them.
It’s mostly empty. The steel mill that was supposed to fire up when prices rose got closed and scrapped forty years ago. The men who knew how to frame and wire and plumb a house came up through an apprenticeship system we stopped paying for. The sawmills can’t add a shift fast enough to matter. We send the price signal in, loud as it’ll go, and the box has almost nothing to hand back. So the only thing that moves is the price.
The US just ran the experiment. From 2020 to 2022 we poured more money into housing than at any time in living memory. Stimulus, savings, mortgage rates near zero. If the box were full of productive capacity, that money turnsok back to data into houses and prices hold. That’s not what happened. Prices roughly doubled in the hot markets. Sales spiked. 2021 was the strongest year for home sales since 2006, but almost none of that was new houses. It was the same stock changing hands for more. Building barely moved off the number we’ve built for forty years: we started a few more homes and finished fewer of them, and per person we built less than half what we built in 1972. The money didn’t become houses. It became price. Then the Fed raised rates and the music stopped. Sales fell off a cliff to the lowest level since 1995, the same houses now not changing hands at all.
Ask where the money went and the honest answer is most of it went nowhere. People sold high and bought high and handed the gain right back across the closing table. It’s musical chairs. The board jumped up all at once and almost nobody got to keep their seat’s new price. The Federal Reserve’s own books show it. Household home equity grew by something like fourteen trillion dollars over those years, and nearly all of it was paper, just prices rising on houses that already existed. Underneath the paper, families were pulling real money out through debt every single year. The wealth was a number on a statement, frozen in place, borrowed against, and the houses we actually needed never got built.
When the prices got too high, the only tool on the wall came down off the wall. The Fed raised interest rates. That move can’t lay a foundation. It can’t train a welder. It has no power to bring a single house into the world. All it can do is make borrowing hurt until people stop trying to buy. The problem was too little supply, and the one big lever we own can only destroy demand. They call it price stability. What it really is, is making people poorer until they stop wanting the thing we failed to build. That’s bringing a weedeater to trim a bonsai. The tool isn’t weak. It’s the wrong tool, swung at something that needed a careful hand, and the careful tools got thrown out years ago.
The New York Times ran a guest opinion piece lately about a development in Vancouver called Senakw. The Squamish Nation got its land back, land that sits outside the city’s rules, and on it they’re building eleven towers and six thousand homes at a density the city would never have allowed. The Times held it up as the lesson: the thing preventing us from building, it says, is us. Cut the rules, beat the neighbors, and the housing comes. It’s a good story, and the piece is half right, though it quietly concedes its own punchline, calling Senakw a “modest dent” in a city that needs eighty-three thousand homes by 2033. The modest dent is the tell. The one building freed from every rule is a rounding error against the need, and it still had to be built out of the same lumber and steel and labor everybody else is fighting over. The rule was never the only thing in the way. The piece even reaches for the right yardstick, sizing the crisis in years of a worker’s pay, the oldest honest measure there is, and then lays the whole thing at the feet of the zoning board.
The places that already did what the rule-cutters want tell the rest of the story. Tennessee doesn’t strangle builders with reviews. Neither does Texas. They’re loose, they’re cheap by coastal standards, and they are still not building their way back to what we built in 1950, and their prices climb anyway. If the only thing in the way were the rules, the light-regulation states would have solved this already. They haven’t. Even the Times piece admits it without quite meaning to: home-building in the loose Sun Belt all but shut down after 2008 and never came back. By 2025, builders started barely three-quarters of the pre-crash pace. They had the permission. They didn’t have the capacity. The rules are a wall. They’re not the wall that stops you.
You hit that wall the moment you get serious about building ten million homes. You run out of people who know how to build, because the trades are a finite pool and you can’t conjure a framing crew out of a press release. Then you run out of the things houses are made of. The lumber, the steel, the concrete, the wiring, the breakers, the transformers. Try to build everything at once and the commodity markets take their cut and the price on every input climbs, the same way it did during Covid when you couldn’t get a sheet of plywood at any price. The stuff has to come from somewhere physical. It is not sitting in unlimited supply at the back of a Home Depot. We import a big share of what a house is made of, roughly a third of our lumber, almost all of it from Canada, and China pours about twenty times the cement we do. A transformer can take a year to show up. That’s what’s left of the productive base after thirty years of deciding it was cheaper to buy the world’s stuff than to make our own.
And here’s the part that should stop both sides cold: the workers we still have build less than they used to. Construction is the one corner of the American economy that went backwards. Almost everything else got more productive (farming, manufacturing, shipping) while a construction worker today puts up less than a worker did in 1970, with value added per worker down something like forty percent over fifty years. Sit with how strange that is. The tools got better (nail guns, prefab trusses, tower cranes, a full model of the house before a shovel hits dirt) and we got slower anyway. That doesn’t happen by accident. It happens when you pull out the apprenticeship that turned a kid into a journeyman, when the share of construction workers in a union falls from around forty percent in the seventies to about one in nine today, when the contractor who could carry a bench of skilled crews between booms gets chopped into a chain of subcontractors racing each other to the bottom. The knowledge of how to build well, fast, and at scale is not a file you can download. It lives in people, it passes hand to hand, and we spent forty years letting it walk out the door.
We used to keep other tools in the shed. The TVA was the government building dams and power plants and stringing line and electrifying a poor region the market had skipped. The Defense Plant Corporation was the government building factories, hundreds of them, owning them, running war production at a tempo no private firm would have risked. The Reconstruction Finance Corporation put public money and public ownership to work building real things. We did this. It wasn’t a theory. We won a war with it and lit up the South with it. We built houses with it, too. After the war, on government mortgages and the materials those same war plants left behind, the country put up homes at a pace we have never matched since, a new one finished every sixteen minutes. And then we decided to forget the option was ever on the table.
That’s what public ownership is for. Not a slogan. A tool. A national capacity to mine and mill and build that can be told what to do instead of coaxed into maybe doing it if the quarter looks good. A public builder can keep crews and a transformer line ready for a mission and stand them down when the mission’s done, and it doesn’t go bankrupt for doing it, because it doesn’t answer to a quarterly return. The private builder can’t carry that idle capacity. It would be malpractice for him to try. So the surge capacity this country needs to house its people will not come out of the box no matter how we set the dials, because nobody inside the box is paid to hold it.
We just crowned the world’s first trillionaire off the back of public research and public contracts, and the same week we’re told the public can’t build a thing. The capacity that floated that fortune is the capacity we’re not allowed to use for ourselves, to house a nurse or wire a town or lay a mile of rail. We have it backwards. The state is allowed to be the ground a private fortune grows on, and forbidden from growing anything for the rest of us.
That’s where housing stops being only about housing. A country that can float private fortunes bigger than most nations off its own investment, and in the same breath can’t build a working person a home they can afford, has broken the link between what the public puts in and what the public gets back. The public pays in. A few private hands take out. The accounting runs upside down. People feel it even when they can’t name it, and a people who feel the deal is rigged stop believing the system answers to them. That’s the democracy problem sitting inside the housing problem. It’s the same problem wearing a different coat.
The narrow set of dials isn’t a law of nature. It’s a set of tools we threw out and then trained ourselves to forget we ever owned. The mill was real. The apprenticeship was real. The public builder was real. We had the capacity and we chose to lose it, which means we can choose to build it back. Put the dull tools back on the wall. Then open the box and look at what’s actually inside, because that’s the only way the houses are ever coming out the other side.
Corbin, you wrote all that good stuff about housing supply and you didn't write a word about the land market.
Here's the thing. Lumber, cement, bricks - all commodities. Land isn't a commodity. Land is the value of your development minus the cost of building it. Oh and you pay for land up front.
Why does that matter?
Because it means you can't cut prices to find more sales. If you did, you wouldn't be able to afford the land.
Prices are so high that only a few can afford them but the land market prevents them from cutting prices to what buyers can afford.
Busting the land market would look different in the US than it does here in the UK but that's the key
Put it another way, home building is a manufacturing business strapped to the side of a speculative one. Knock the speculation out and the manufacturing side can do what consumer goods do - cut prices and drive up quality