Affordable Housing and the American Dream

The image of a white picket fence and a house to call your own often comes to mind when discussing the American Dream, but this image is just a shallow reflection of a much deeper concept. It may be true that the dream is actualized through meaningful access to housing; however, it is ultimately about living freely and flourishing by adhering to the ideals of the American Founding, through which one pursues happiness and reaches one’s fullest potential. That dream is made possible when individuals have access to housing that is affordable, well-located, and suited to different lifestyles.

Without these preconditions, the American Dream is much harder to achieve.

Yet for decades, institutional barriers have threatened this foundation. Zoning laws, restrictive regulations, and environmental policies are just the beginning of many obstacles that drive up the cost and limit access to housing opportunities. This bureaucratic entanglement in the world of real estate is no accident. Inflated prices and restricted housing access are prime examples of the consequences of a political philosophy that fears growth and rewards obstruction.

To prevent the consequences of unchecked regulatory policies, we must change our institutional arrangements in order to strengthen private property rights. The expansion of housing opportunities will result from the protection of private property by minimizing restrictive regulations. Housing policy must, therefore, be evaluated by a deeper standard that asks whether it will help or hinder the pursuit of happiness in America.

The American Dream and Where It Happens

In pursuing the promise of the American Dream, individuals primarily seek housing that they can afford. Yet securing housing within a budget is often insufficient for reaching one’s full potential. Various living options provide individuals with communities that better align with their needs and goals.

The location of a house not only determines housing prices and the type of community, but is crucial in providing access to work opportunities. It is of little use if an affordable home is not close enough to specific job markets and transportation. Moreover, housing located near schools and fitting job opportunities better enable people to find work that aligns with their goals.

However, location is not the only thing that matters. There must also be a variety in housing options. Different housing is necessary for people of different ages and stages in their careers and financial situations. Access to housing fitting their specific situation allows them to lead fulfilling lives.

Access to appropriate housing, however, is becoming more and more difficult. For example, according to a recent Realtor.com survey cited by Fox Business, 75 percent of US adults still consider homeownership an essential component of the American Dream. However, the US homeownership rate has declined to around 65 percent as of late 2024—a clear signal that while the goal is still widely valued, many are simply unable or unwilling to attain it. The access to housing “services” is not achieved only or always by ownership, but the disparity between those who see ownership as vital and those who can actually own a home is indicative of a broader problem.

This growing space between dreams and reality is not coincidental. When regulations restrict growth—when permitting takes years and fees and prices strangle new development—the opportunity to flourish is diminished. The limitation of where people can live ultimately limits who those individuals can become.

Housing Diversity and the Anti-Industrial Ethos

However, on top of obvious natural market conditions, people are often priced out of suitable areas by restrictive zoning laws that inflate costs further. This only makes the ideal home increasingly unattainable. These roadblocks are not only the result of bureaucratic oversight but are indications of resistance to healthy growth and development. Today, people no longer embrace the idea of building more homes with enthusiasm. They act with suspicion and resistance. This resistance reflects a broader agenda that seeks to limit growth in the name of environmental protection and restrain technology. It sees development as a threat to character and calls for nature to be protected for its own sake.

In The Anti-Industrial Revolution, Ayn Rand argued that many modern intellectuals treat progress as dangerous. For them, “Technology is man’s enemy and should be restricted or abolished.” While she wrote provocatively, her insight is pertinent.

Arguably, this mentality dominates policies affecting housing today. Regardless of the meritorious aims hoped to be achieved by zoning regulations, in city after city, new housing proposals are greeted not with welcome but with protest. Growth is seen as an assault on the environment, a force that must be stopped. This cultural suspicion of building is not rooted in data—it is an aesthetic and moral reaction. It favors the static over the dynamic, the known over the possible, as embodied in the “precautionary principle” behind many regulatory decisions. This mindset animates NIMBYism, fuels procedural delay, and gives rise to a legal culture that elevates environmental review over economic need.

Housing is not just shelter—it is the infrastructure of human flourishing.

One of the clearest examples of legal boundaries deteriorating into extreme anti-industrialist policy is the National Environmental Policy Act (NEPA). Its original goal was to ensure that the federal government considered environmental factors when developing major projects. However, as noted in a recent article, what began as guiding principles that called for environmental consideration resulted in out-of-control green tape.

NEPA and other anti-industrial policies have a chokehold on meaningful project development, causing costly delays and hindering innovation. When environmental policy is fueled by restriction rather than guidance, the result is not greener cities but fewer homes, longer commutes, and higher living costs.

Public Choice and Political Failure

Cultural opposition does not entirely explain the issues in our housing system. To understand the deeper failures in housing, we must also look to the incentives that drive decision-making on every level.

Public choice theory analyzes political behavior and the incentives that drive self-interest. The theory begins from a simple premise: people are people, whether they work in the private or public sector. Their behavior is shaped not by moral superiority or institutional label, but by rules and rewards. Zoning commissions and planning boards, accordingly, are not populated by angels, but respond to external pressure from organized homeowner groups, vocal opponents of change, and entrenched interests with something to lose. 

With housing, this explains why zoning commissions are often driven by vocal homeowners who resist development to protect their property values, while those who would benefit from more housing—young renters and future residents—are unorganized and underrepresented. The result is a system of prevention and delay rather than abundance and opportunity.

To paraphrase James Buchanan, these problems are structural, not just personal. Restoring a housing environment fit for the American Dream requires more than replacing officials. It requires reforming the rules that shape their decisions. Land use governance must be redesigned to reduce barriers and protect the freedom to build from politically powerful opposition. We must evaluate political outcomes by examining rules, incentives, and structures—not merely intentions. The structure of land use decision-making rewards delay, empowers obstruction, and penalizes innovation. Thus, high prices and long waits are predictable outcomes. The system is working as it was (inadvertently) designed.

This system of incentives does not just slow housing development—it actively limits the types of housing before they can even be built. For example, many cities ban the construction of duplexes or require minimum lot sizes through zoning. These rules force builders to focus on homes that are large and expensive instead of more affordable ones. Furthermore, the artificial boundaries of urban areas restrict where development can occur and, in turn, raise prices within those limits.

By preventing diverse housing options such as apartments or duplexes, communities shut out housing that would provide young people and those with less means stability and room to grow. Here, the system does not offer what people need. Supply is far from demand, not because the market cannot reach equilibrium, but because restrictive policy prevents it.

This systemic issue is not only economic but human. The restrictions that cause high prices, long commutes, and other limitations directly undermine the promise of the American Dream.
For example, New York City recently eliminated rental brokerage fees and is on track to broaden rent freezes, allegedly to protect renters, as reported by the Wall Street Journal. These regulations quickly backfired. Landlords raised rents by hundreds of dollars, often outweighing initial savings. As the WSJ article put it, the Fairness in Apartment Rental Expenses Act (FARE) “lit a fire under pre-existing rent growth,” forcing prices higher in an already strained market.

New York’s current housing market shows how price controls and procedural barriers sustain the crisis, shift costs, and create roadblocks. When incentives are skewed, well-meaning policy often backfires. The very renters these polices claim to be helping are the people who pay the price.

The Housing Question and the American Dream

Everything we have argued so far should not be interpreted as claiming that some of the interests protected by zoning and environmental regulations are illegitimate or not worth protection.

Our argument is that there is a better way of balancing competing claims and making them harmonious by private covenants and case-by-case decisions. Renewed respect for property rights is preferable to bringing in the coercive power of the state to situations that cannot possibly be assessed ex ante by legislators or assumed to be taken by impartial and not interested regulators.

If legislators and regulators can be pressured by one or other group, there is no reason to believe that justice will be done. The most politically savvy group will win, as countless cases in which zoning rules are “adjusted” to attend to special interests demonstrate. What is given by coercion may be taken by coercion, with all the deleterious consequences in terms of growth that uncertainty causes. That is the lesson of zoning practice, not one of protection of individual rights.

Ultimately, the American Dream should be discussed in moral or cultural terms; behind every dream, however, lies a material structure that makes it possible. Housing is not just shelter—it is the infrastructure of human flourishing.

Today, the Dream is not threatened by market forces but by policy failures and ideological resistance. Many fear growth, distrust builders, and reward delay. This logic must be reversed. Growth should no longer be treated as a vice but as a public good. Preserving the American Dream requires us to challenge the cultural suspicion of abundance by reforming zoning and streamlining permitting. Most importantly, it requires us to recognize that housing is not merely a special interest but a human need essential to freedom and flourishing.

Any opinions expressed are the author’s and do not necessarily reflect those of Liberty Fund.