Over the past four years, it has become increasingly clear that the housing market isn’t functioning properly. Mortgage rates have roughly tripled from their pandemic-era lows, yet home prices have barely declined nationally, and are higher in many areas. The result is an affordability problem unlike anything we’ve experienced in decades.
As of the second quarter of 2026, only 19% of California households could afford the state’s median-priced home. With mortgage rates moving higher since then, affordability isn’t likely to have improved.
Government policy contributed to getting us here. Interest rates remained extraordinarily low way longer than such low rates were needed, helping home prices rise much faster than incomes. Meanwhile, decades of restrictive zoning, expensive permitting and insufficient construction left many desirable markets chronically undersupplied.
We can’t turn back the clock, but there are things government could do now to create a healthier housing market.
Make Your Mortgage Portable
Imagine having a 2.75% mortgage and being able to take it with you when you buy your next house.
Mortgage portability could do more than almost anything else to reduce today’s “lock-in effect.” Millions of homeowners have mortgages far below current rates and would face dramatically higher payments if they sold and financed another home.
There are significant logistical challenges because most mortgages are packaged into mortgage-backed securities, whose investors purchased an interest secured by particular properties, but that’s an obstacle worth trying to solve.
Portability could increase both supply and transaction volume. Existing homeowners would have more freedom to move, while first-time buyers could benefit as more entry-level and move-up homes come onto the market.
Target Mortgage Borrowing Costs
The Federal Reserve’s purchases of mortgage-backed securities during quantitative easing demonstrated that government intervention can push mortgage rates lower. Increased demand for mortgage bonds generally reduces the yield investors require, which can translate into lower mortgage rates.
But there is no free lunch. Large-scale asset purchases can stimulate the economy and contribute to inflation—the very problem that helped push rates higher in the first place.
Rather than returning to emergency-era monetary policy, policymakers could explore more targeted ways of reducing borrowing costs for home loans without pouring excessive liquidity into the entire economy.
Reduce the Cost and Time Required to Build
We constantly talk about California’s housing shortage while simultaneously making housing extraordinarily expensive to build.
A new development in Los Angeles can encounter permit fees, plan-check fees, school fees, development impact fees, affordable-housing linkage fees and numerous other costs before construction even begins. Then add lengthy entitlement processes, overlapping agency requirements, building regulations and taxes such as Measure ULA.
The federal government can add to those costs as well. Tariffs on lumber, steel, aluminum, appliances and other building materials increase construction costs that ultimately become embedded in the price of housing. Whatever the broader arguments for tariffs may be, making the materials needed to build a home more expensive works against the goal of making housing more affordable.
Some regulations serve important purposes. But every additional dollar spent navigating the process ultimately has to come from somewhere—usually through higher rents, higher sale prices, lower land values or a project that simply doesn’t get built.
Government should establish more predictable approval timelines and reduce unnecessary costs. If a project complies with zoning and objective building standards, it shouldn’t require years of discretionary review. If we want more, and thus less expensive, housing, we should make housing easier and less expensive to produce.
Make Property Taxes More Portable
California’s Proposition 13 protects homeowners from being taxed out of homes they’ve owned for decades. That’s an important benefit, but it also creates another form of lock-in.
Someone who purchased a home 40 years ago might pay $3,000 per year in property taxes while a buyer purchasing the same house today could pay more than $20,000. Selling and purchasing another property can therefore carry a significant financial penalty.
Proposition 19 already allows homeowners 55 and older, along with certain disabled homeowners and disaster victims, to transfer their property-tax base to a replacement primary residence, subject to certain rules. Why not consider expanding that concept?
Allowing more homeowners to take some or all of their existing tax basis with them would remove another reason people remain in homes that no longer fit their needs.
Government should also be cautious about simply subsidizing buyers. When housing is undersupplied, tax credits or down-payment assistance can put more money in buyers’ hands without creating another home for sale. Increasing supply and removing barriers that keep existing homeowners from moving addresses the underlying problem instead.
A Healthier Market Needs More Movement
The ultra-low interest rates of a few years ago were wonderful for homeowners who locked them in. But one consequence is a housing market in which many owners now feel financially trapped in their existing homes. The good news is that we aren’t seeing widespread mortgage distress. Most homeowners can afford their payments and many have substantial equity. But a market where people can’t afford to move isn’t necessarily healthy either.
The numbers are striking. In 2005, the typical American homeowner stayed in their home for 6.5 years. Today it’s around 12 years. In Los Angeles, it’s now approximately 20 years.
People need to relocate for jobs, accommodate growing families, downsize when their children leave home and move closer to family as they age. Sometimes people just want a change of scenery. First-time buyers need homes to become available so they can enter the market.
We don’t need another artificial housing boom. We need a housing market in which people can afford to move again. Government policy helped create some of today’s distortions. Thoughtful government policy can help remove them.
Any content, resident submissions, guest columns, advertisements, and advertorials are not necessarily endorsed by or represent the views of Best Version Media LLC (BVM) or any municipality, homeowners associations, businesses, or organizations that this publication serves. BVM is not responsible for the reliability, suitability, or timeliness of any content submitted, inclusive of materials generated or composed through artificial intelligence (AI). All content submitted is done so at the sole discretion of the submitting party.
