
by James A. Bacon
Broadly speaking, there are two types of strategies for making housing more affordable: demand-side strategies and supply-side strategies.
The demand-side approach makes it easier for people to buy houses — lower down-payments, interest-rate subsidies, outright grants. Such tactics might help the lucky individual households that qualify, but only by allowing Homeowner A to outbid Homeowner B, effectively displacing Homeowner B. There’s no net gain in the housing stock, thus no net gain for the population as a whole.
Supply-side strategies address the root cause of unaffordability: regulations that drive up the cost of construction and restrict the number of new lots. In a market economy, building more housing doesn’t benefit just those moving into the newly constructed dwelling units, it benefits all potential homeowners by altering the supply-demand calculus that determines housing prices.
Typically, Democrats go for demand-side solutions, aiming to boost the buying power of lower-income households. It hasn’t worked out very well. One would think that Republicans would have leaped into the breach with supply-side solutions, but they haven’t been very imaginative in crafting new legislation.
But there’s hope in the 2025 General Assembly session. State Senator Schuyler VanValkenburg, D-Henrico, is introducing a set of supply-side bills that could do more to move the needle on housing than anything else I’ve seen in Virginia.
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