Regulatory barriers worsen housing crisis in the US
- A new study reveals a shortfall of 15 million housing units in the US due to reduced construction rates from 2000 to 2020.
- Regulatory barriers, including zoning restrictions, have significantly affected housing supply, leading to increased prices.
- The government is exploring technological solutions, like AI, to expedite housing development and address growing public skepticism about AI technology.
In the United States, a recent study by Edward Glaeser and Joseph Gyourko highlights a significant decline in housing construction from 2000 to 2020, demonstrating that there are currently 15 million fewer housing units than would have been expected had the construction rate remained consistent with the previous decades. The study, performed by the National Bureau of Economic Research, explores the impact of various regulatory barriers, particularly zoning restrictions, which have become more pronounced in recent years, leading to higher prices and severe shortages in the housing market. These phenomena are particularly evident in large sunbelt markets like Atlanta, Dallas, Miami, and Phoenix, where the previous surge in new housing supply has drastically slowed or collapsed, creating a pressing issue for homebuyers and renters alike. The analysis reveals that the reduction in housing units coincides with an increase in housing prices across these metropolitan areas, which indicates a clear relationship between housing construction rates and market pricing. As developers face mounting barriers to obtain building permits, many prospective housing projects are stalled or entirely abandoned. This stagnation not only limits the housing supply but also places additional burdens on those in search of affordable homes, contributing to the rising cost of living and exacerbating economic inequalities. Government responses have emerged, with leaders in the UK, such as Prime Minister Sir Keir Starmer, emphasizing the potential of technologies like artificial intelligence (AI) to improve planning processes and help expedite housebuilding. Starmer has pledged £1 billion for enhancing the UK's computing power, indicating a willingness to innovate in addressing housing shortages. The government aims to utilize AI to assist planning officers in streamlining the bureaucratic processes that currently lengthen the timeframe for constructing new homes, promoting a more efficient approach to urban development. Despite the optimism surrounding technological interventions, skepticism remains widespread among the public regarding AI's impact on job security and overall societal benefit. Addressing these concerns is crucial as the government collaborates with tech stakeholders to cultivate an efficient framework for housing development. As AI cuts through red tape, it is hoped that potential benefits will outweigh fears and lead to the quicker completion of essential infrastructure needed to alleviate housing shortages in both the US and the UK.