Not only have home prices soared over the past decade, but it’s the so-called “affordable homes” that have seen the biggest price increases.
Why it matters: Rising prices, exacerbated by a shortage of affordable homes, put homeownership out of reach for many, driving them to a rental market that’s also seen remarkable cost increases.
Zoom out: It’s a doom loop. A shortage of affordable homes means that buyers compete fiercely for the cheapest ones, pushing up prices.
- Prices for the bottom third of homes are up 124% since 2015, while the top third increased 77%, per an analysis from Moody’s Analytics.
The big picture: The most desirable cities are becoming affordable only to the wealthy, while many of those of more modest means are forced into longer commutes — creating more traffic, more environmental strain, and greater social division, writes Mark Zandi, Moody’s Analytics chief economist, in a new paper.
The latest: The paper endorses legislation set to be re-introduced Tuesday morning by Sen. Elizabeth Warren (D-Mass.), the ranking Democrat on the Senate banking committee, along with Senator Raphael Warnock (D-Ga.) and Rep. Emanuel Cleaver (D-Mo.) in the House.
- The American Housing and Economic Mobility Act of 2025 is an ambitious piece of legislation that Warren’s been backing since 2018.
- It would provide more than $500 billion over the next decade to build more homes, funded by an increase in the estate tax.
- The money would be used to incent localities to cut regulations that impede building, as well as go to first-time homebuyers, among other things.
“My comprehensive bill would build 3 million new homes across America, bring down rents by 10%, and create incentives for local governments to cut unnecessary red tape that drives up costs,” Warren said in a statement to Axios.
Between the lines: Cutting red tape sounds great — and may appeal to conservatives — but the zoning restrictions that impede building are typically fiercely defended by Republicans, including the president.
- But there is a surprising amount of bipartisan agreement that something needs to be done about housing affordability.
- That includes a bill introduced in 2023 that would reform rural housing programs cosponsored by four Democratic senators and four Republicans; and another that would increase home buyer protection in credit reports that passed the Senate last year.
- Democratic banking committee staffers tell Axios they’re looking to find some areas for compromise. They pointed to a part of Warren’s bill that would restrict private equity firms’ ability to buy homes.
Reality check: Congress has little appetite for spending on folks in need these days — as lawmakers ponder slashing Medicaid in order to extend the 2017 tax cuts. Affordable housing funding has reportedly been stalled by the Trump administration.
What to watch: There will be a Senate hearing on the topic Wednesday.