The market for first-time home buyers in America is dismal. Since 2021, the annual income needed to qualify for a mortgage has increased by 60 percent, driving the median age of a first-time home buyer to 38 years old — a record high.
One reason young Americans are struggling to buy their first homes is that we aren’t building enough of them. In May, new home construction rates in the U.S. fell to their lowest level since the pandemic. On an annual basis, new home construction is down nearly 5 percent.
The U.S. needs to increase its housing supply to put the American dream of homeownership back in reach for average families. Congress, however, has a knack for taking complex problems and making them worse by forcing a one-size-fits-all solution on communities that we haven’t set foot in.
The housing problem must be solved at the local level, and this starts by removing nonsensical regulations. Today, costs associated with homebuilding regulations make up 25 percent of the sticker price for a new single-family home and 40 percent of the cost of a new apartment complex.
These regulations also prolong the building process. Nowhere is this problem clearer than in Los Angeles.
When wildfires ripped through Los Angeles in January, officials estimated that it would take upwards of 18 months to clean up the 2.5 million tons of debris left behind. The Trump however, worked with state and local officials to complete the clean-up in just six months — a tremendous accomplishment. During those same six months, however, Los Angeles County officials approved only 90 of the more than 1,200 building permit applications it received in the wake of the fires.
In other words, it’s easier to clean up 2.5 million tons of wildfire wreckage than it is to clear Los Angeles’ building-permit red tape. And Los Angeles wonders why families are fleeing.
Congress shouldn’t force one-size-fits-all building codes on every community, but the federal government has an obligation to avoid wasting taxpayer dollars on cities that sacrifice the American Dream at the altar of overregulation.
Sen. Elizabeth Warren (D-Mass.) and I introduced the Build Now Act to incentivize new home construction by tying each city’s funding through the Department of Housing and Urban Development’s Community Development Block Grant Program to their rate of homebuilding.
Here’s how it will work: Cities that fail to increase their rate of homebuilding faster than the national median rate would lose 10 percent of their Community Development Block Grant funding. HUD would then reallocate those funds to cities that exceeded the national median rate of home building. Cities with the most growth will receive the biggest pieces of that pie.
America’s metropolitan areas will have two years to start building homes before HUD crunches the numbers to determine whether they will receive the carrot or the stick from the Community Development Block Grant Program.
Cities that have homeownership costs under control, such as those where the median home price is below the national median, won’t see any changes to their Community Development Block Grant funding. Nor would any city that issued an emergency disaster declaration in the last year. The rest of our major cities, however, will need to start allowing builders to build.
The solution to America’s housing crisis isn’t going to come out of Washington. A strategy that works in Baton Rouge may not work in Boston. But too many cities are regulating away the possibility of homeownership, and Congress is done throwing good money after bad policies.
The U.S. is the freest, most prosperous nation in the world. Buying your first home shouldn’t feel like a pipe dream. It’s time to start rewarding the cities that are working hard to make homeownership a reality for American families — and stripping funding from those that don’t.
John Kennedy is the junior U.S. senator from Louisiana.
