Housing and the American Dream: How We Broke It

The story of how America went from building freely to building almost nothing

In my first article on Housing and the American Dream, I boiled down our housing crisis to one ratio - the median home price to median income ratio. Over the last 50 years, that ratio has gone from a reasonable 2.8x to an unreasonable 5.0x. In the graph below, you can the the full arc of this slow moving train wreck dating back to WWII. The key point of divergence between home prices and income was 1970, just a few years before my baby boomer parents began their home ownership journey. Thankfully for them, they had time to get fully on the home ownership bandwagon before things went awry. They bought their final home in 1981.

America used to know how to build.

In 1940, as the country emerged from the Great Depression, fewer than half of Americans owned their homes — 43.6%, the lowest rate in a century. Then something remarkable happened. Soldiers came home from war. The economy boomed. The federal government made a bet on the middle class — through the GI Bill, the Federal Housing Administration, and a mortgage market designed to put ownership within reach of working families. And builders built.

Housing starts went from 326,000 in 1945 to more than a million a year within just a few years of the war’s end. William Levitt — the era’s most famous builder — was completing a new home every sixteen minutes on Long Island. His homes sold for $6,990. A veteran could move in for $90 down and $58 a month. Over the three decades following World War II, America built more than 40 million new homes — the vast majority of them single-family houses on modest lots in modest neighborhoods, designed not for the wealthy but for the working family trying to get a foothold.

Here is what makes that achievement truly remarkable. At the peak of the postwar boom, America was adding new homes at a rate of 3 to 4 percent of its total housing stock every single year. To put that in perspective: if we built today at that same rate, we would be adding 4 to 5 million homes a year. Instead, we add about 1.4 million — less than 1 percent of our current stock. We are not just building fewer homes than we used to. We are building at a fraction of the pace that built the American middle class.

The result of that postwar effort was extraordinary. By 1960, the homeownership rate had climbed to nearly 62 percent. By 1970, it was approaching 65 percent. For four consecutive decades — through boom and recession, through Vietnam and Watergate and stagflation — homeownership rose with every Census. A house wasn’t just shelter. It was the first rung on the ladder. My parents grabbed that rung in 1974, in Santa Fe, for $24,000. Millions of families just like them did the same.

We knew how to build then. The question is: what happened?

The Wall Goes Up

Here is the paradox at the heart of the American housing crisis: the same generation that benefited most from affordable housing pulled up the ladder behind them.

It didn’t happen all at once, and it wasn’t always intentional. It began with something understandable — the natural desire of homeowners to protect what they had built. A house in postwar America wasn’t just a place to live. For most middle-class families it was their largest asset, their retirement plan, their children’s inheritance. When developers proposed new construction nearby, homeowners showed up to fight it. Not because they were villains. Because they were rational.

But rationality at the individual level produced catastrophe at the collective level.

Through the 1950s and 1960s, local governments began layering on restrictions — minimum lot sizes, setback requirements, parking mandates, design review boards, height limits. Each rule, taken alone, seemed reasonable. Together they added up to something profound: in city after city, across suburb after suburb, it became effectively impossible to build the kind of modest, affordable home that had housed the postwar middle class. The regulatory stack — minimum lot sizes, minimum square footage requirements, parking mandates, setback rules, and design review processes — made the simple starter home either illegal, impractical, or financially unviable in most American cities. The $24,000 home my parents bought in Santa Fe in 1974 — a simple house on a modest lot — couldn’t be built in most American cities today. Not because anyone passed a law saying “no small homes.” But because the accumulated weight of a hundred smaller rules made it impossible.

The 1970s accelerated everything. The 1968 Fair Housing Act had opened the suburbs to families who had previously been excluded, and many existing residents — consciously or not — responded by making it harder to build. Zoning codes tightened. Minimum home sizes grew. Lot-size requirements expanded. What had once been a tool for basic land-use planning became something closer to a moat.

At the same time, something shifted in how Americans thought about their homes. Housing stopped being a blue-chip stock — stable, reliable, a place to live and raise a family — and became a growth stock. Price appreciation wasn’t just a pleasant surprise; it became the expectation, even the point. And once homeowners started thinking of their houses as investments, the politics of housing changed permanently. Every new home built nearby was a potential threat to their returns. The incentive to restrict supply wasn’t just emotional — it was financial.

By the 1980s, a new planning philosophy had taken hold: fiscal zoning. Cities and towns used their zoning powers not just to organize land use but to engineer home values upward — through discretionary approvals, minimum square footage requirements, mandatory design standards, and ever-larger lot minimums. The goal, barely concealed, was to keep housing expensive and keep certain people out.

The word that defined this era wasn’t “affordability.” It was NIMBY — Not In My Backyard. And it went from a fringe complaint to an organizing principle of American local government in the span of a single decade.

Then came the lawyers.

In 1969, President Nixon signed the National Environmental Policy Act — NEPA — a five-page law designed to ensure that major federal actions considered their impact on the environment. It was a genuinely good idea, born of a genuine public desire to protect the natural world. The late 1960s had produced the Cuyahoga River fire, the Santa Barbara oil spill, and Rachel Carson’s Silent Spring. Americans across the political spectrum wanted action. Nine months after Nixon signed NEPA, Governor Ronald Reagan signed California’s own version — the California Environmental Quality Act, or CEQA. Two Republicans. One shared instinct: protect the environment.

Nobody could have anticipated what these laws would become.

Over the following decades, NEPA and CEQA evolved from transparency requirements into the weapons of choice for anyone who wanted to stop something from being built. Environmental impact statements that were originally intended to take months began taking years. The median NEPA review today runs 3.5 years. The average is 4.5 years. Some projects have waited more than a decade just to get through the permitting process — not because they posed genuine environmental threats, but because the process itself had become a tool for delay. Challengers lose their NEPA lawsuits roughly 80 percent of the time — but even a losing lawsuit adds an average of four years to a project’s timeline. You don’t have to win to win. You just have to file.

California’s CEQA became particularly notorious. A 2015 study found that only 13 percent of CEQA lawsuits were brought by parties with any prior record of environmental advocacy. The rest were neighbors, competitors, labor unions, and interest groups using environmental law as a cudgel for purposes that had nothing to do with the environment. In California, to “CEQA” a project became its own verb — meaning to bury it in litigation regardless of its actual environmental merit. A new apartment building in San Francisco — dense, urban, near transit — would face the same review gauntlet as an oil refinery. The law made no distinction.

More than a dozen other states enacted their own NEPA equivalents, each creating independent grounds for litigation entirely beyond the reach of federal reform.

The result: a construction industry buried under overlapping layers of federal, state, and local review — each one a potential chokepoint, each one exploitable by anyone with a lawyer and a grievance. By the time a builder navigated NEPA, state environmental review, local zoning hearings, design review boards, and neighbor appeals, years had passed and hundreds of thousands of dollars had been spent before a single shovel hit the ground. Many projects simply died. Others were never proposed in the first place.

The wall was fully built. What had started as a reasonable desire to protect neighborhoods and the environment had calcified into an elaborate system for preventing housing from being built at all. The people who paid the price were the ones who hadn’t gotten in yet.

The Bill Comes Due

The wall didn’t go up overnight. It took fifty years of accumulated decisions — zoning codes tightened here, an environmental lawsuit filed there, a parking minimum added, a lot size increased, a design review board empowered — each one small enough to seem inconsequential, all of them together adding up to a crisis hiding in plain sight.

By the time America noticed, the damage was severe.

Today the United States is short an estimated 6 million homes. Not 6 million luxury condominiums or vacation properties — 6 million everyday homes for working families, young couples, teachers, nurses, firefighters, and police officers who cannot afford to live near the places where they work. The national median home price now exceeds five times the median household income — up from 2.8 times when my parents bought their first house in 1974. A growing share of American households spend more than half their pre-tax income on housing. Half. Before taxes. That leaves almost nothing for everything else.

The geography of this crisis is not random. It is a direct map of where the wall went up highest. Los Angeles, San Francisco, New York, Boston — cities with the most restrictive zoning, the most aggressive use of environmental review, the longest permitting timelines — have the most severe shortages and the most extreme price-to-income ratios. Houston, which took a different path — legalizing smaller lots in 1998, maintaining relatively open land use — has a price-to-income ratio of roughly 4:1 and a homelessness rate nearly fifteen times lower than Los Angeles. The experiment has been run. We know what works.

The human cost is not abstract. It is the young couple who cannot buy their first home because there are none to buy at a price they can afford. It is the teacher who commutes ninety minutes each way because she cannot afford to live in the district where she teaches. It is the adult child living in their parents’ basement not because they lack ambition but because the math simply does not work. It is the family that never forms, the community that never coheres, the city that loses its nurses and its firefighters and its janitors to the exurbs — and wonders why everything starts to feel a little less alive.

It is, in the most direct sense, the American Dream being priced out of existence.

And yet — remarkably — this is a solvable problem. It was created by policy, and it can be fixed by policy. The wall was built by human decisions; human decisions can take it down. Houston proved it at the city level. States like Texas, Florida, and Montana have proven it at the state level, enacting land use reforms that have produced measurable increases in supply and measurable improvements in affordability. The evidence is not theoretical. It is sitting there, waiting to be applied.

Which is why the 21st Century ROAD to Housing Act matters. Passed this week with 358 votes in the House and 85 in the Senate — margins that reflect something close to national consensus — it is the first serious federal attempt to begin dismantling the machinery that built the wall. It streamlines environmental reviews that have become weapons of delay. It rewards cities that actually build. It incentivizes by-right zoning, reduces parking minimums near transit, and modernizes the definition of manufactured housing to expand the lower-cost end of the market. It is not a silver bullet. No single piece of legislation could be. Fifty years of accumulated obstruction will not be undone in a session of Congress.

But it is a beginning. And beginnings matter.

My parents did not need a federal housing bill to buy their first home in 1974. The system worked well enough on its own — land was available, lots were legal, builders could build, and a working-class family could afford what was produced. The tragedy of the past fifty years is not that we lacked the resources or the ingenuity to keep that system working. It is that we chose — through a thousand small decisions made by local governments, planning boards, environmental lawyers, and neighborhood associations — to make it stop working.

We can choose differently. We have to.

I have been thinking a lot lately about what it means to love a country. Not the uncomplicated love of a flag or an anthem, but the harder kind — the love that looks clearly at what is broken and refuses to look away. The housing crisis is broken. Our politics are broken. The sense that we are all in this together — that the American project is a shared one, that your neighbor’s struggle is in some way your own — feels more fragile right now than at any point in my lifetime.

And yet I keep coming back to this: we built 40 million homes in thirty years. We did it together. We can do it again.

What we cannot afford — literally and figuratively — is to keep pretending that the divisions tearing at this country have nothing to do with the material conditions of people’s lives. When a family cannot afford to put a roof over their heads, they do not feel like stakeholders in the American project. They feel left behind. And people who feel left behind do not tend to reach across the aisle. They tend to burn things down.

Fix housing. Fix a piece of this. More to come — especially on July 4th.

This is the second in a series of essays on housing and the American Dream. To learn more, please read the Leadership Now Project’s policy paper, “More Homes, Lower Costs,” which I co-authored earlier this year. The first essay in this series, “Housing and the American Dream,” was published on June 24, 2026.