Why Housing Is So Expensive, and the Myth of Timing the Market

The worst thing to happen to the housing market, especially for new entrants, is that we took power around permits out of the hands of bureaucrats and put it into the hands of homeowners. As Scott Galloway explains, homeowners have every incentive to block new construction: they like the absence of traffic and construction, and they know that less housing means greater scarcity, which fuels the value of their primary asset. "The incentives of the people issuing permits is totally contrary to the needs of entrants," he says. "This is a supply problem, not a demand problem."

The Supply-Side Blind Spot

The fundamental mistake in American housing policy, according to Galloway, is treating affordability as a demand problem. The government provides tens of billions of dollars in good-faith interventions — low-income housing tax credits, mortgage interest deductions, first-time home buyer credits — but all of this does is give buyers more money to compete over the same limited supply, which drives prices higher. "We need to address the supply side," he argues, pointing to federal and local legislation that would penalize NIMBY-style obstruction and provide tax incentives for developers.