In Focus delivers deeper coverage of the political, cultural, and ideological issues shaping America. Published daily by senior writers and experts, these in-depth pieces go beyond the headlines to give readers the full picture. You can find our full list of In Focus pieces here.
Home ownership is less affordable than ever, and our birthrate is lower than ever. The housing crunch is the biggest economic problem of the current day, and the Baby Bust is the biggest problem of the next 30 years.
While Uncle Sam has very limited control over the birthrate, but officials in Washington are making moves on housing that could help — but also could hurt — our demographic problem.
TRUMP SIGNS PAIR OF EXECUTIVE ORDERS AIMED AT FIGHTING HOUSING CRISIS
The House and the Senate have passed related housing bills which contain provisions that could increase the supply of housing. But the latest version of the bill includes language that could limit home construction and sink the bill.
The debate is contentious, but it’s good for the country that we’re no longer ignoring the dearth of homes and babies.
Economics and birthrate
The birthrate in the U.S. has fallen from 2.1 babies per woman in 2007 down to a record low of 1.6 in 2024. This year’s nationwide graduating high school class will be smaller than last year’s, and the classes will shrink every year for the foreseeable future. Already, America has fewer children today (as a raw number, not merely as a percentage) than we did in the 2010 Census.
The standard explanation is cost: “Almost one in four Gen Z and Millennials say they don’t want to have kids because it’s too damn expensive,” a high-profile podcaster claimed while interviewing Kamala Harris during the 2024 election.
All the evidence suggests this is not really true. Americans who make $150,000, $250,000, or $400,000 a year don’t have more kids than those making $50,000 or $75,000.
The birthrate was far higher during and just after the 2008 Great Recession than it was in 2019 (the best economy of our lives). A year of raising a child, measured in terms of weeks of work by the median American male worker, became more affordable between 2010 and 2020, according to economist Jeremy Horpedahl.
A 2022 study by economist Melissa Kearney found no correlation between states where life has become more unaffordable for young adults and states where the birth rates have dropped the most.
The Baby Bust is mostly cultural. It’s mostly about the lack of community, increasing individualism, an autonomy-centered feminism, rising materialism, declining social trust, despair for the future, and new norms of intensive parenting.
But “mostly cultural” doesn’t mean “entirely cultural.” The Baby Bust is partly economic. That economic portion is almost entirely about one thing: It is extremely expensive to buy a home. It’s so bad that 20-somethings don’t even see homeownership as a possibility. Thus they don’t really consider starting a family.
A housing lottery in Brazil provides strong evidence that housing affordability drives family formation.
Consortiums in Brazil there pool money from many families, and randomly award the cash to a few families for the sake of buying a home. Twenty-somethings who won the lottery were one-third more likely to have kids than those who didn’t, and they had larger families. Notably, the lottery winners tended to move to more family-friendly areas — places with less crime and more homeowners.
Demographers Lyman Stone and Wendell Cox in another study probed the reasons why women decide to have a smaller family than they would want. Housing was the main factor. “Housing costs explain more total foreshortening of family goals … than any other factor we surveyed,” they concluded. “Nothing — not singleness, preference for leisure, schooling, child care costs, or student debt —accounts for as many expected ‘missing children’ vs. Americans’ desires than housing costs.”
Another study in the Netherlands found that higher home prices drive down birthrates overall.
Policymakers can and should address home affordability for a hundred reasons. The most important reason is to make it easier for young people to start and raise families. That means that a housing agenda should focus specifically on family-friendly housing.
Family-friendly housing
How can policymakers make housing more affordable? That’s not an easy question to answer.
Easier is what not to do. Governments should not subsidize buyers. We tried that before, and it inflated prices, created a housing bubble, a financial crisis, and the Great Recession, which kicked off the current Baby Bust.
What we need is more houses. Prices are set by supply and demand, and so an increased supply should make homes more affordable.
But the right solution more complicated than simply increasing supply. Not all housing is equally family friendly. Building tall apartment buildings is good because it maximizes housing per acre, but there’s plenty of evidence that tall buildings are not pro-family.
For starters, high rises tend not to be great at fostering community, despite the physical proximity. It turns out front yards, sidewalks, and cul-de-sacs are better places for the sort of unplanned repeated encounters that create neighborliness.
Also, when you have little kids, it’s incredibly valuable to have outdoor play places right through the kitchen door. Finally, apartment-builders these days rarely build three- or four-bedrooms apartments, and two-bedroom apartments can act as a cap on family size.
Demography researcher Dan Hess has made the case convincingly that very high density drives down birthrates. It’s inarguable that denser places in the U.S. have lower birthrates. Yes some of that is due to selection (people without kids prefer proximity to space), but Hess, Stone, and others suggest that when people have a yard and a basement — what my wife and I call “pressure-release valves” — they are more willing to have one more kid.
Also, when people live near single-family homes, they are more likely to live among children and parents. Because pregnancy is contagious, this is pro-natal.
Housing policy
Any time politicians want government to make something better, they should start by asking where government is currently making things worse, and then stop doing that thing.
Excessive regulations drive up the cost of building homes. The Clean Water Act and the National Environmental Policy Act add tens of thousands of dollars to the cost of building a home. These rules especially harm family homes. In a big apartment building, unlike in a single-family home, the regulatory costs are spread across many units.
Both Congress and the White House are taking stabs at this problem, through their housing bills and a recent executive order, respectively.
President Donald Trump’s executive order directs the federal agencies to try and minimize “burdens on housing construction, preservation, adaptive re-use, and infrastructure that facilitates housing construction.” His Department of Housing and Urban Development will start working with states to reduce the regulatory burden on building new homes — especially single-family homes.
The bill in Congress, meanwhile, would make it easier for builders to build homes in factories rather than on site. Currently “manufactured housing” is a synonym (or a euphemism) for trailer homes. Under current federal law, all manufactured homes must sit on a permanent chassis, as if every factory-made home is about to be hauled off by a truck. The housing bills would end that mandate.
An unfortunate amendment to the latest version, though, may sink the bill, or render it unhelpful to increasing the supply of housing.
Following on Donald Trump’s rhetoric about banning hedge funds from owning single-family homes, the House bill included a provision that effectively bans financial institutions from building rental houses. The builders would be required to sell a home within seven years of building it.
Blocking one economic model of home-building will result in less home-building.
Meanwhile, politicians of both parties are advancing measures that would make family homes harder to come by.
Many counties give senior citizens a special property tax exemption, and many states are pushing to abolish all property taxes. Both of these policies make homes more expensive and reduce the incentive of empty-nesters to sell.
A key driver of the current housing shortage in many places is senior citizens’ reluctance to sell. This, interestingly, is one reason that even small apartments could help families: If a town makes small, nice, modern apartments in such quantity that they are affordable, more elderly residents might sell their 3-bedrooms, increasing the supply of family homes for newlyweds or families with young kids.
HOUSING IS THE AFFORDABILITY ISSUE THAT COULD COST THE GOP IN 2026
There are a hundred question marks here, because this is somewhat new territory. Nevertheless, simply asking these questions and exploring these policies represents progress. If we ask what housing policies and mixes will give us more families, we are taking a side. Some libertarians, economists, or social liberals are uneasy with that. It’s not neutral. It discriminates in favor of marriage and parents.
But what we need now is more families and bigger families, and so we shouldn’t be afraid to take the side of marriage and babies.
