Housing affordability is a pressing issue that both Republicans and Democrats can agree on—home prices in many cities are simply out of reach for working Americans. The American Enterprise Institute (AEI) suggests that decades of restrictive policies at the local, state, and federal levels have contributed to this problem by both limiting development and artificially inflating demand through affordability-focused policies. Instead of increasing regulation, AEI proposes a shift toward encouraging more home construction to address the supply gap.
At ReadySetLoan, we believe homebuyers should be empowered with knowledge and options when it comes to securing their dream homes. Here are five key solutions AEI presents to solve America's housing shortage:
1. Auctioning Federal Land for Development
One of AEI’s most ambitious proposals involves auctioning off a small portion of the 380,000 square miles of undesignated federal land in the lower 48 states. Specifically, they identify 1,000 square miles—mostly near urban areas in western states like Nevada, Utah, and Arizona—that could be used for new housing. AEI estimates that this could accommodate up to 5 million homes.
A portion of this land could also be dedicated to developing entirely new cities, called “freedom cities,” modeled after planned communities like Columbia, Maryland, and The Villages in Florida. While this is a long-term strategy (taking decades to fully develop), it offers a large-scale solution to the housing crisis.
2. Increasing Density in New Subdivisions
Many newly developed subdivisions, referred to as Greenfields, could be planned with higher density from the start. AEI suggests that increasing the number of homes per acre in these developments—without changing infrastructure such as sewer and water systems—would allow for more efficient use of land and create additional housing supply without drastically altering community character.
3. Infill Development & Teardowns
Older neighborhoods in urban and suburban areas often have lower-density housing than what modern zoning could allow. By strategically redeveloping these properties—tearing down older structures and replacing them with townhomes, duplexes, or small apartment buildings—communities can add much-needed housing stock in desirable areas while maintaining neighborhood charm.
4. Transforming Underutilized Urban Spaces
Many urban areas have commercial or mixed-use zones that are underutilized and could be repurposed for residential housing. AEI argues that turning vacant office buildings, aging shopping centers, and parking lots into “livable urban villages” could provide new housing opportunities in city centers where demand is highest. Cities like Seattle and Austin have already piloted similar projects with great success.
5. Accessory Dwelling Units & Small-Scale Additions
Accessory Dwelling Units (ADUs), such as backyard cottages, garage apartments, and basement suites, offer another way to increase housing availability without major new developments. Many states and municipalities are relaxing zoning rules to encourage homeowners to build ADUs on their properties, providing affordable rental options and additional income opportunities for homeowners.
The Role of Government & Market Forces
While AEI is critical of federal policies that attempt to artificially expand homeownership through government-backed loans, they emphasize that increasing supply through private-sector development is the key to lowering costs. By reducing regulatory barriers, streamlining zoning laws, and unlocking more land for development, policymakers can enable builders to meet demand in a natural, sustainable way.
At ReadySetLoan, we understand that finding an affordable home in today's market can be challenging. That’s why we’re here to guide homebuyers through financing options, helping them navigate loan programs that make homeownership more accessible. If you’re looking to purchase a home and want expert advice, contact ReadySetLoan today!
By implementing even a fraction of these five strategies, America could see a major increase in housing availability over the next decade. The question remains: Will policymakers and developers take action to solve the crisis? One thing is certain—homebuyers deserve better options, and ReadySetLoan is here to help every step of the way.
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