Why Home Prices Are High by Design: Government Policy, Not the Market

With the Fed’s recent policy decisions set to increase inflation yet again, rising prices will continue to ravage the economy and the housing sector in particular. Before housing prices rise further, it’s worth examining how high home prices are the deliberate and intentional result of government policy and the special interest groups that lobby for it.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

In a press conference in the Oval Office last week, Donald Trump stated that he wants to keep home prices high. In the past, Trump has stated that he may declare a housing “state of emergency” on the issue of historically high housing prices. When asked for specifics last week, Trump stated that he’s interested in making it possible for young people to buy homes. But he also said that he doesn’t want to “knock those numbers [i.e., prices] down” because current homeowners like to keep prices high. “It’s a big part of their net worth,” Trump said, referring to older homeowners for whom their real estate is usually their largest asset. Trump continued: “I want them to continue to have a big value for their house…You create a lot of housing all of a sudden and it drives the housing prices down.” 

Trump admitted that wanting to keep prices high for current owners is in conflict with policies that make housing more affordable for new owners. Yet, Trump wouldn’t say how he plans to carry out the impossible task of keeping home prices high while simultaneously making homes more affordable.