Big Government Locks Young People Out of the American Dream

Last Thursday’s debate among the New York City mayoral candidates highlighted affordability as a pressing concern for young Americans. Democrat candidate Zohran Mamdani, the frontrunner, emphasized that affordability is the city’s most significant issue. Independent candidate Andrew Cuomo and Republican hopeful Curtis Sliwa agreed, arguing that Mamdani’s proposals are financially impractical.

Mamdani’s focus on affordability has resonated with young voters, who are increasingly struggling to find affordable housing. However, critics argue that greater government intervention could exacerbate the affordability crisis, which many believe is rooted in existing government policies. The current U.S. economy is characterized by significant government regulation, which has contributed to rising housing costs.

According to a study by Paul Emrath, Ph.D., for the National Association of Home Builders, government regulations accounted for approximately $93,870 of the average price of a new home in the United States in 2021, representing about a quarter of the total cost. This regulatory burden has made homeownership increasingly unattainable for young Americans.

University of Central Arkansas professor Jeremy Horpedahl noted that in 2023, it took 31 percent more hours of work to purchase a square foot of the median home compared to 1971. This trend disproportionately affects young households, as rising housing prices create a significant economic advantage for those who already own homes. A report from Fortune indicates that U.S. home sales in 2024 and 2025 are projected to be the lowest in 30 years.

In addition to housing costs, young Americans are facing rising health care expenses. U.S. health care expenditures as a percentage of GDP nearly tripled from 1960 to 2023, increasing from 5 percent to 17.6 percent. The growth of federal programs like Medicaid and Medicare has contributed to these rising costs. While young people typically spend less on health care than older generations, the percentage increase in costs is significant, further straining their finances.

Gen Z Americans are reportedly spending 31 percent more on housing and 46 percent more on health insurance compared to Millennials a decade ago, according to Michael Peterson at The Daily Economy. High housing prices have led to a situation where many young people are unable to transition from renting to homeownership. Apollo Global Management found that the median age of a U.S. homebuyer was 56 in 2024, nearly double the age of 31 in 1981.

The disparity between housing prices and household income has widened significantly over the decades. In 1984, the median annual household income was $22,420, with a median home price of $79,950. By 2024, those figures had risen to $83,730 and $418,975, respectively. This means that the median family had to work for 3.6 years to buy a home in 1984, compared to 5 years in 2024. The increase in real housing prices has particularly impacted young buyers, with only about 1 in 4 home buyers being first-timers, the lowest share since 1981.

Factors contributing to the housing crisis include restrictive zoning laws, a lack of construction following the 2007 housing bubble collapse, and rising mortgage interest rates. Freddie Mac estimates that the U.S. is short by 3.7 million housing units, a figure that may be conservative. Zoning regulations alone have been estimated to have reduced the number of homes built in the U.S. by 20 million, according to a July 2022 study.

The high cost of housing is viewed by some as a political choice rather than a market failure. Wendell Cox of Demographia argues that escalating land costs, driven by government policies, have made homeownership increasingly difficult for the middle class. He notes that the ability to own a home has historically been a hallmark of a strong middle class, but this opportunity is diminishing due to government intervention.

The challenges facing young Americans in achieving homeownership and managing rising costs are seen as failures of government policy rather than market dynamics. Advocates for deregulation argue that removing government-imposed barriers could help alleviate the affordability crisis. Recent moves by the Trump administration aimed at deregulation have been noted, but many believe that comprehensive legislative action is necessary to address the underlying issues affecting the economy and housing market.