EXECUTIVE SUMMARY
Welcome back to Boyd’s weekly roundup series, where we cover the latest newsflow, media stories, and institutional/academic research as it all relates to housing.
This week’s highlights include: newsflow on unexpected strength in new home sales (though there are questions), a new bill in TX limiting foreign ownership of real estate, and “accidental” landlords; analysis on small lot reform and urban infill, as well as what Americans think about housing; and academic research on mortgage rate lock-in, immigration’s impact on housing supply, “folk economics”, property taxes, and the welfare impact of institutional landlords.
If you haven’t already, be sure to check out our articles published this week on the history of housing costs and on US companies that are unleashing private market dynamism to try and make housing more affordable and accessible for everyone.
For the upcoming week, expect another edition in our series of data-heavy articles as well as a piece on the various housing “pills” — lenses through which one may run attribution on the housing affordability crisis (e.g., YIMBY/NIMBY-pill, immigration-pill, crime-pill, etc.).
Additionally, tune in to the Substack Live session later this morning where
and will be discussing all of the above as well as engaging with comments/Q&A.Cheers!
COMMUNITY POLL
Last week’s poll asked readers the following: Which one policy lever would cut housing costs most in 3-5 years? The top answers:
Land-value tax reform (45%)
Permit shot clocks + fee cuts (27%)
State preemption of local bans (18%)
Upzoning + by-right (9%)
In this week’s poll, we thought it would be fun to see which US city our readers consider to be most troubled from a policy standpoint1:
NEWSFLOW + MEDIA STORIES
US new home sales jump to more than 3-1/2-year high; economists dismiss rise as a fluke
Lucia Mutikani | Reuters
The bigger-than-expected increase in sales last month reported by the Commerce Department on Wednesday was shrugged off by economists, who noted that new housing data was extremely volatile and subject to revisions. They also said the jump in sales was at odds with subdued homebuilder sentiment.
“There is no obvious driver. I expect that this spike in sales will be largely reversed in coming months,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets.
“One could potentially point to lower mortgage rates ... but the bigger fall has come in September. One might think that builders capitulated and cut their asking prices sharply, but the average price of new homes sold in August actually jumped versus July.”
New home sales shot up 20.5% to a seasonally adjusted annualized rate of 800,000 units last month, the highest level since January 2022, the Commerce Department’s Census Bureau said. The increase was the biggest since August 2022.
“Lower mortgage rates should provide some lift to new home sales activity this fall,” said Ben Ayers, a senior economist at Nationwide. “But builders are preparing for softer sales activity over the next six months with fewer single-family home projects breaking ground and fewer permits authorized.”
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New Bill Limits Foreign Real Estate Ownership in Texas
Reid Wilson | Texas Real Estate Research Center
SB 17 effectively bans some foreign entities from investing in Texas real estate and comes with steep penalties for those who do.
The previous law was clear regarding foreign investment in Texas real estate:
“An alien has the same real and personal property rights as a United States citizen.” Tex. Prop. Code § 5.005.
Texas first restricted foreign ownership in 1891, but that law was declared unconstitutional on technical grounds later the same year. A revised, less restrictive bill was passed in 1892, then modified in 1921.
In 1965, foreign ownership limits were repealed as unreasonable and an undue interference on economic development. After another 60 years without restrictions, Texas is again restricting foreign ownership.
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The Rise of ‘Accidental Landlords’
Vince Dixon | NY Times
When homeowners can’t find buyers for their properties, they usually have three options: lower the price, remove the listing, or convert the home into a rental. By tracking recent for-sale listings that were converted to rentals, Parcl Labs, a housing data and analytics firm, found that “accidental landlords” — homeowners who chose the last option — were becoming more common, especially in the country’s Sun Belt region.
The “accidental landlord” trend is accelerating, the researchers found, particularly in markets where large institutional investors — businesses that own more than 1,000 single-family homes — hold a substantial chunk of available properties. Since the end of the pandemic, those large investors have flocked to the states lining the bottom of the United States from coast to coast, chasing job and population growth. But surging inventory and a declining number of buyers have given rise to a competitive crop of former sellers who are now “accidental landlords.” Most are individual owners competing with those large institutional investors in the rental market.
The trend is one of several signs that the real estate market is becoming increasingly unfriendly to sellers. De-listings increased by 57 percent in July compared with last year, according to an August Realtor.com report, which called 2025 “the least seller-friendly summer since Realtor.com began tracking data in 2016.”
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Learning from Jersey City
Benjamin Schneider | Vital City
In recent years, Jersey City has walked a fine line. It has rolled out the red carpet for developers with high-density zoning and an easy planning process. Simultaneously, it has steadily increased public benefits developers are required to contribute. And it has done all this while maintaining a strong rent-control program for older units.
Perhaps the city could have asked for more from developers. Perhaps it’s already asking for too much. Either way, “It would make our lives so much easier,” Solomon said, “if New York City got its shit together and started adding supply commensurate with demand.”
INSTITUTIONAL ANALYSIS
Learning from Houston’s Townhouse Reforms
Emily Hamilton | Mercatus Center
One factor that sets Houston apart from other US cities is the extent to which it makes land-efficient single-family construction possible within existing neighborhoods, particularly single-family neighborhoods, while most cities prevent any increase in density with zoning rules in these neighborhoods. Houston’s overall liberal rules surrounding housing development have contributed to its affordability compared to peer cities and the country as a whole. Small-lot reform in Houston shows that new townhouses provide a less expensive housing option relative to detached housing, opening up opportunities for more people to live in existing neighborhoods. Houston’s experience points all state and local policymakers seeking opportunities to legalize more lower-cost housing construction toward a reform that produces small infill construction at scale.
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Not Just Suburban Sprawl — Dense Places Can Still Build
| Economic Innovation Group
The problem is legal, not physical. Many of these jurisdictions have effectively outlawed the kinds of housing that meets modern demand. Zoning codes often prohibit even small apartment buildings, and existing homeowners frequently block reform.
But the demand isn’t going away. People want proximity to jobs, to transit, and to each other. The remarkable growth of places like NoMa is proof that, when allowed, dense places can and do build.
The housing crisis in America isn’t just about building more — it’s about building in the right places. Outer-ring suburbs and exurbs will continue to grow. But if we’re serious about addressing affordability, climate change, and economic opportunity, we also need more growth in the places where it’s hardest — and most necessary — to build.
That means continuing to unlock parking lots and low-rise commercial corridors in downtowns. It also means continuing to prioritize building in the suburbs — but in the form of infill, rather than just sprawl. And it means rethinking how we define which land is “buildable.”
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What Americans Think About Housing
Searchlight Institute
When asked about increasing the number of homes in their community, 44% think it will raise prices at least slightly, compared with just 24% who think it will lower prices, and another 32% aren’t sure either way.
Respondents believe that the primary drivers of high housing prices are investors using housing for profit (48%), the high cost of building materials (46%), and the rent-setting power of landlords (43%). Only 9% say that the length of time it takes to build housing is one of the biggest causes. Recent efforts to tie immigration to housing prices do not seem to have worked, with only 28% of Republicans (17% overall) citing immigration as a cause of high prices.
Even if Americans aren’t convinced that additional housing is the way out of the affordability crisis, they generally support the increased building of homes. They see high costs, slow processes, and profit-seeking behavior as sharing blame for the cost crisis. While they think new housing in their community will overall provide benefits, they’re wary of increased crime and rising everyday costs. Clear, consistent standards and limited timelines are popular, but changes to the overall makeup of housing and communities are less so.
ACADEMIC RESEARCH
Mortgage Lock‐In, Lifecycle Migration, and the Welfare Effects of Housing Market Liquidity (2025)
Kristopher Gerardi, Franklin Qian, and David Zhang
Younger home buyers are disproportionately affected by mortgage lock‐in, which disrupts their typical pattern of moving to higher‐quality neighborhoods.
Without mortgage lock‐in, time on the market increases by 80–109%, house prices decline by 2–4%, and match surplus increases by 0–5%.
The pricing and match surplus effects are 2–3 times larger for households in lower‐income areas, due to a higher idiosyncratic dispersion in buyer valuation leading to larger match surplus variation.
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Cracking Down, Pricing Up: Housing Supply in the Wake of Mass Deportation (2024)
Troup Howard, Mengqi Wang, and Dayin Zhang
Treated counties experience large and persistent reductions in construction workforce, residential homebuilding, and increases in home prices.
Undocumented labor is a complement to domestic labor: deporting undocumented construction workers reduces labor supplied by domestic construction workers on both extensive and intensive margins.
Three years after Secure Communities rollout, the average county has foregone the equivalent of an entire year’s worth of additional residential construction: 2,423 fewer building permits and 1,997 fewer new construction transactions.
We find a striking lack of any wage increases in the construction sector … This evidence strongly suggests … builders reduce output rather than increase wages.
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Folk Economics and the Persistence of Political Opposition to New Housing (2024)
By Clayton Nall, Christopher Elmendorf, and Stan Oklobdzija
The fundamental barrier to supply‐based housing reform is not simply NIMBY homeowners wielding local vetoes, but a widespread folk‐economic skepticism: many voters do not believe that adding housing units will ever lower prices.
Respondents applied supply‐and‐demand reasoning correctly to groceries, cars, and labor markets, yet overwhelmingly rejected it for housing, indicating a uniquely entrenched misconception about housing markets.
Because most voters blame high prices on landlords and developers rather than constrained supply, even well‐designed state‐level interventions could backfire—instead of boosting construction, they may generate demand‐side controls that further discourage development.
Folk economics thus helps explain why NIMBYism persists even among homeowners who say they want lower costs: they simply do not conceptualize new housing as a route to affordability.
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Property Taxes and Housing Allocation Under Financial Constraints (2024)
Joshua Coven, Sebastian Golder, Arpit Gupta, Abdoulaye Ndiaye
Low property taxes amplify lock-in effects for elderly homeowners, limiting housing access for young families.
Higher property taxes function as ‘embedded leverage,’ reducing required down payments through a capitalization effect and enabling greater homeownership among younger households.
Raising California’s property taxes to Texas levels would increase overall homeownership by six percentage points and young household ownership by eight percentage points.
Conversely, higher capital gains taxes worsen lock-in effects and reduce young homeownership, whereas asset taxes can effectively reallocate housing to higher-valuation households when financial constraints exist.
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Market Power and the Welfare Effects of Institutional Landlords (2025)
Felipe Barbieri and Gregory Dobbels
Institutional acquisitions increase average renter welfare by $2,760 per year (with rents decreasing by 2.3%). This net benefit reflects two opposing effects: higher concentration raises rents by 3.8%, but higher rental supply lowers rents by 6.1%.
On the other hand, the welfare of the average homebuyer decreases by $49,950.
Policies that solely reduce concentration in single-family rental ownership may be welfare-improving, since the efficiency gains from concentration do not seem to offset the inefficiency from higher market power. On the other hand, bans or severe restrictions on institutional landlords may help first-time homebuyers, but likely at the expense of renters and homeowners.
Multi-product pricing is a key source of institutional landlords’ market power: by internalizing how price changes for one listing impact demand for others, institutional landlords are incentivized to raise rents across their portfolio.
REMINDER
If you or someone you know is interested in competing in the Boyd Essay Contest for a chance at $2,500 cash and a Boyd fellowship, the submission window is open through the end of October. Details here:
Boyd Essay Contest: Call for Submissions
We’re looking for essays that answer one simple question: What’s an actionable, outside-the-box solution to America’s housing crisis?
San Francisco — the national case study in procedural drag. Historically glacial approvals (median ~34 months for multifamily, 2018–21) and serial appeals layered on CEQA made timelines and risk intolerable. Recent state pressure (HCD review, SB-35 ministerial pathways) and local “shot clocks” are helping, but this is course-correction after a lost decade.
New York City — heavy tenant protections + incentive cliff = whiplash supply. NYC faces severe overcrowding and chronic underbuilding relative to demand. The 2022 lapse of 421-a choked the pipeline; completions are spiking in 2025 largely from pre-expiry starts, but permits remain soft without a durable replacement (e.g., 485-x) and broader zoning reform.
St. Paul — a cautionary tale of rigid rent control. The 2021 ordinance (initially no vacancy decontrol, minimal exemptions) triggered an ~80% collapse in multifamily permits before partial walk-backs in 2023–25. It’s the cleanest US example of a single policy torpedoing new supply.
Los Angeles — layering taxes onto a brittle pro-forma. Measure ULA’s transfer tax on high-value deals is associated with a sharp drop in large-building permits and an estimated ~18% hit to multifamily production (≈1,900 units/yr) relative to 2020–22. Citywide permitting has “nosedived,” compounding long approvals and cost pressures.
so many yimby wins in Texas. Happy to see it!