Question
When did we forget how to build housing in America?
Genuinely curious about this. There's a chart showing US housing starts per capita peaked in 1972 and has been below that level basically continuously since. Even the 2005 bubble didn't get back.
Common stories I keep hearing:
- Local zoning got more restrictive
- NEPA + environmental review made everything slow
- Construction productivity stagnated (Allen 2020 paper)
- Boomer homeowners voted themselves a supply restriction
Which of these are doing the most work? I have a sense it's not all equal but I can't tell which one is the load-bearing one.
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Construction productivity is the one that gets underweighted. Manufacturing productivity is up ~3x since 1970, construction is flat or slightly down. That's a much weirder phenomenon than zoning and we have a worse explanation for it.
What's the leading hypothesis on construction productivity? I've seen "regulation prevents prefab adoption" and "fragmented industry can't capitalize R&D" but neither feels like a complete story.
There's a Brookings paper that argues a big chunk is the project complexity treadmill — each generation of buildings has more systems (HVAC, fire, accessibility, data) and we don't get to amortize. The thing being built in 2024 isn't comparable to 1972.
My uncle is a small developer in the suburbs of Boston. He says the binding constraint is *time*, not money. Permits take 18-30 months for things that used to take 6. The financing math doesn't survive that delay even at low rates.
Changed a mind:
- “shifted me from thinking 'cost' was the issue to 'time-to-permit' being the actual constraint. That's the lever.”
Houston, FWIW, builds ~50% more housing per capita than the national average while having weaker zoning than peer cities. Doesn't disprove anything but suggests zoning is doing more work than the "productivity stagnation" story alone admits.