The summon arrived on a summer morning, and William Levitt answered it the way he answered everything: with speed, with scale, and with the conviction that a house was a product like any other. He had watched the Navy build entire bases in weeks during the war, standardized plans moving down an assembly line of men and machines, and he had come home convinced that the same logic could remake the American landscape. The country needed homes, millions of them, and Levitt intended to build them the way Henry Ford built cars. The idea was not modest.
It was, in fact, absurd on its face. Housing had always been built one house at a time, by local contractors, on scattered lots, with no two structures quite alike. Levitt proposed to buy thousands of acres of potato farmland and turn it into a city of identical houses, produced at industrial speed, sold to working families at prices they could actually afford. In 1947, Levitt and Sons purchased four thousand acres on Long Island, roughly thirty miles east of Manhattan, and set to work.
The operation was broken into twenty-seven distinct steps. One crew poured foundations. Another framed walls. Another installed plumbing.
The workers moved from house to house, performing a single task with machine-like precision, while the product stayed still. Lumber was pre-cut at a central facility. Nails were pre-sorted. Appliances were bought in bulk at massive discounts.
At peak production, a new home was completed every sixteen minutes. The houses themselves were modest, Cape Cod boxes with two bedrooms, one bathroom, a living room, and a kitchen, about 750 square feet. They were so identical that residents joked about walking into the wrong house by accident. But they came with a refrigerator, a stove, a washing machine, and a built-in television, all included in the price of about $7,900, roughly $90,000 in today’s money.
A veteran could buy one with no money down and monthly payments of about $60. The first Levittown eventually held more than 17,000 homes. Levitt built a second in Pennsylvania, a third in New Jersey, a fourth in Maryland. Together, the four communities housed more than 50,000 families.
He was not alone. Developers across the country raced to meet the demand, and in the thirty years after the war, more than 40 million new housing units went up in the United States, at least 75 percent of them single-family homes. By the 1960s, nearly two-thirds of Americans lived in the suburbs. Before the federal programs that made this possible, fewer than 45 percent of American housing units were owner-occupied.
Afterward, that figure surged to nearly 65 percent and stayed there for decades. The machinery that produced this transformation had been built in the 1930s, in the depths of the Depression. The Great Depression had crushed the American economy. Banks were failing by the thousands.
Unemployment hovered around 25 percent. The housing market, shaky even before the crash, had collapsed entirely. Foreclosures were rampant. Construction had ground to a halt.
Families who had dreamed of owning homes lived in shanty towns, in tents, in abandoned cars. The housing system, such as it was, had simply stopped functioning. President Franklin Roosevelt understood that housing was not merely a personal matter but an economic engine. When people built homes, they bought lumber, nails, and appliances.
Builders hired workers. Workers spent money. The whole economy moved. So Roosevelt created something that had never existed before: a federal architecture of housing finance.
In 1934, his administration established the Federal Housing Administration. The idea was elegant in its simplicity. The government would not build the homes. It would not lend the money directly.
It would insure the mortgages. If a homeowner defaulted, the government would cover the bank’s losses. Before the FHA, mortgages were brutal. They required down payments of 30 to 50 percent.
They lasted only five to ten years. Often they required the full principal to be repaid at the end in a massive lump sum, a balloon payment. These terms locked out virtually everyone except the wealthy. With the government backstopping the risk, banks suddenly offered longer terms, lower down payments, and fixed monthly payments an ordinary family could budget around.
The 30-year fixed-rate mortgage, arguably the single most important financial instrument in the creation of the American middle class, was born from this moment. Four years later, in 1938, Congress created the Federal National Mortgage Association, better known as Fannie Mae. Its job was to buy mortgages from local banks, bundle them up, and sell them to investors. This freed up capital for the banks to issue even more mortgages.
It was a self-reinforcing cycle. More loans meant more homes. More homes meant more construction. More construction meant more jobs.
More jobs meant more people who could afford to buy homes. It was a machine designed to produce prosperity, and for a while, it worked beautifully. Then came the war, and after the war came the greatest housing boom the world had ever seen. When World War II ended in 1945, roughly 16 million American servicemen came home.
They were young, restless, and ready to start families. But there were not enough homes. The Depression had stalled construction for years. The war had diverted all building materials to the military.
The baby boom, just beginning to surge, was about to create demand on a scale the country had never experienced. Families were doubling up. Young couples were living with their in-laws. Some veterans and their wives lived in converted grain bins, in old trolley cars, in Quonset huts left over from military bases.
The housing shortage was a national emergency. The federal government stepped in with one of the most transformative pieces of legislation in American history: the Servicemen’s Readjustment Act of 1944, better known as the GI Bill. Among its many provisions, the GI Bill offered returning veterans low-interest mortgages with no down payment required. A veteran could walk into a bank, prove his service, and buy a home without putting a single dollar down.
The monthly payments were often less than what he had been paying in rent. And these were not government-built barracks. They were brand new suburban homes with yards, driveways, and modern appliances. But embedded within this golden age of home building were a set of decisions, some deliberate, some careless, that would eventually poison the entire system.
The first was segregation. The FHA did not just insure mortgages. It decided which neighborhoods were worthy of insurance, using color-coded maps developed by local real estate appraisers. Neighborhoods with black residents, or even neighborhoods near black neighborhoods, were outlined in red and deemed too risky for investment.
This practice, known as redlining, was devastating. It meant that black families were systematically denied access to the very mortgages that were building white middle-class wealth. The GI Bill, despite its universal language, followed the same discriminatory patterns. The Veterans Administration adopted the FHA’s racial exclusion policies.
Between 1934 and 1962, only about 2 percent of the $120 billion in federally subsidized new housing went to non-white families. Two percent. While white veterans were buying homes in Levittown for $60 a month, black veterans who had fought in the same war, who had risked their lives for the same country, were being told that the neighborhood was not available to them. It was not an accident.
It was policy, and its effects echo to this day in the racial wealth gap, in the geography of poverty, in the school districts still funded by property taxes from homes black families were never allowed to buy. The second decision that would come back to haunt America was zoning. It sounds innocuous. It sounds like good governance.
In its original form, it was. Early zoning laws were designed to keep factories away from homes, to prevent a slaughterhouse from opening next to a school. Reasonable stuff. But over time, zoning evolved into something else entirely.
It became a tool of exclusion. After the Supreme Court struck down explicitly racial zoning in 1917, many local governments shifted to a new strategy. They did not say, You cannot live here because you are black. Instead, they said, You cannot live here because this neighborhood only allows single-family homes on half-acre lots.
If you cannot afford that, too bad. It achieved the same result through economic exclusion rather than explicit racial exclusion, and it was perfectly legal. By the middle of the 20th century, single-family zoning had become what one expert called practically gospel in America. Today, roughly 75 percent of all residentially zoned land in the United States is reserved exclusively for single-family detached homes.
In most of the country, it is literally illegal to build an apartment building, a duplex, a townhouse, or any form of housing that might be affordable to someone who does not already have money. In some suburbs, zoning laws make it illegal to build apartments in virtually all residential areas. Minimum lot sizes have gotten bigger. Height restrictions have gotten stricter.
Setback requirements have gotten more generous. Parking mandates have multiplied. Each rule, taken individually, seems like a modest protection for neighborhood character. Taken together, they form an invisible wall that keeps housing scarce and prices high.
And here is the cruel irony: the very communities that were built as affordable housing, places like Levittown, mass-produced on former farmland for young families with modest incomes, those same communities eventually adopted zoning laws that made it impossible to build anything like them ever again. The ladder was pulled up behind the people who climbed it. Through the 1960s and 1970s, the United States maintained a robust public housing program. The Department of Housing and Urban Development, or HUD, was created in 1965 as part of Lyndon Johnson’s Great Society initiative.
It was supposed to focus on building more housing supply, especially for low-income Americans. Section 8, the largest subsidized housing program in the country, was created in the 1970s, and it worked. In the 1970s, the federal government was financing over 270,000 units of affordable housing per year. Progress was being made, slowly and unevenly, but it was being made.
Then Ronald Reagan took office, and the machinery of affordable housing construction was dismantled almost overnight. In Reagan’s first year, funding for public housing and Section 8 was cut roughly in half, dropping from about $35 billion to approximately $17. 5 billion. By 1983, the HUD budget had been slashed further, to about $8.
7 billion. Over the course of the 1980s, HUD’s budget authorizations fell from $32. 2 billion in 1981 to just $6. 9 billion by 1989, a reduction of 78 percent.
In 1979, Congress had authorized nearly 55,000 new units of public housing. By 1984, the number of new units authorized was zero. Not a reduction. Not a slowdown.
Zero. Reagan’s housing task force, dominated by politically connected developers, landlords, and bankers, released a report calling for free and deregulated markets as an alternative to government assistance. The philosophy was simple: the market would provide. The private sector would build.
Government should get out of the way. But the market did not provide, at least not for the people who needed it most. What the market did was build luxury condominiums, high-end apartments, and McMansions for the affluent. It did not build starter homes.
It did not build affordable rentals. There was no profit in it, and without the federal government filling that gap, no one filled it at all. The result was predictable and devastating. Homelessness, which had been a relatively marginal phenomenon in post-war America, exploded during the 1980s.
By the end of Reagan’s first term, the number of people living on the streets had swelled to an estimated 600,000. In Los Angeles alone, there were somewhere between 50,000 and 75,000 homeless people. Waiting lists for public housing stretched to five, ten, even twenty-five years. Buildings the government owned but refused to maintain fell into ruin.
Elevators broke. Pipes leaked raw sewage. Mold spread through walls. The Chicago Housing Authority’s Cabrini-Green project became a national symbol of public housing’s failure, a place so dangerous and decrepit that it was eventually demolished entirely.
But that failure was not inevitable. It was engineered. You do not starve a system of funding for a decade and then point to its decay as proof that the system does not work. And the cuts did not stop with Reagan.
Both parties, to varying degrees, continued the withdrawal from public housing construction. The bipartisan consensus that emerged in the 1990s and 2000s was that the government should subsidize demand through vouchers and tax credits rather than directly finance supply. The Low-Income Housing Tax Credit, created in 1986, became the primary tool for affordable housing development. It allowed private developers to receive tax breaks in exchange for building units rented at below-market rates.
On paper, it sounded reasonable. In practice, it created a Rube Goldberg machine of financing in which affordable housing developers had to assemble layers of tax credits, grants, soft loans, and private equity just to make a project pencil out. The process was slow, expensive, and hopelessly bureaucratic. In San Diego alone, over 9,000 approved affordable housing units remain stalled because developers cannot close the financing gaps.
The system is designed to produce housing, but it produces mostly paperwork. Then came 2008, and the system broke. The Great Recession, triggered by the collapse of the subprime mortgage market, was a catastrophe that reshaped American housing for a generation. The details of the financial crisis are well documented: the reckless lending, the toxic securities, the regulatory failures.
What is less appreciated is the lasting structural damage it inflicted on the country’s ability to build homes. When the housing bubble burst, construction did not just slow down. It fell off a cliff. Housing starts plummeted by more than 75 percent.
Building permits, which had peaked at 7. 3 per 10,000 residents in 2005, crashed to just 1. 9 per 10,000 by 2009, the lowest level on record since data collection began in 1960. Homebuilders went bankrupt by the thousands.
Construction workers, finding no work, left the industry permanently. Many retrained. Many retired. Many simply never came back.
The construction industry never fully recovered. The 2010s saw the fewest single-family home construction starts since at least the 1960s, nearly half the rate of the decade before the crash. Total building permits per capita in 2024 stood at 4. 3 per 1,000 residents, still 35 percent below the 1960 to 2000 historical average of 6.
6 per 10,000. America is building fewer homes per person today than at almost any point in the postwar era, and it has been doing so for nearly two decades. The reasons are structural, not cyclical. The construction workforce was permanently scarred.
Research published in the journal Real Estate Economics found that the labor contraction caused by the Great Recession accounted for roughly 20 to 40 percent of the decline in building permits that persisted for over a decade afterward. Every month, the construction industry is short around 350,000 workers. The National Association of Homebuilders estimates that the industry needs to hire nearly 723,000 workers per year just to keep pace with demand. Fewer young people are entering the trades.
Vocational training has been underfunded for decades. The average age of a construction worker in America keeps climbing, and every unfilled position means another house that does not get built. On top of the labor crisis, material costs have soared. Lumber prices, relatively stable for decades, went haywire during the pandemic and have remained volatile ever since.
Steel, concrete, copper: all of it has gotten more expensive. Land costs in desirable areas have skyrocketed. And the regulatory burden of actually building a house, the permits, the environmental reviews, the impact fees, the design standards, the community input sessions, has added years and hundreds of thousands of dollars to the cost of construction. Labor now accounts for 40 to 50 percent of total construction budgets in multifamily projects nationwide.
A joint study by the Homebuilders Institute and the University of Denver found that in 2024 alone, the labor shortfall resulted in 19,000 fewer homes built and an annual economic hit of $10. 8 billion. And then there are the veto points. This is a concept housing researchers talk about, and it goes like this: even if you have the money, the land, the permits, and the workers, a single objection from the right person at the right meeting can kill your project.
Neighborhood associations can file appeals. Lawsuits can halt construction on procedural or environmental grounds. Elected officials, terrified of backlash from existing homeowners, can reverse their approvals. Every step of the process is a bottleneck, and every bottleneck is an opportunity for someone to say no.
This brings us to NIMBYism: Not In My Backyard. It is perhaps the most powerful and least understood force in the housing crisis. The basic dynamic is this: existing homeowners have a financial incentive to restrict new construction. Their homes are their largest assets.
Anything that increases housing supply, whether it is an apartment building down the street or a duplex next door, could theoretically moderate or even reduce the value of that asset. So they fight it. They show up at zoning meetings. They file lawsuits.
They elect council members who promise to protect neighborhood character, a polite way of saying keep things exactly the way they are. NIMBYism does not have to be overtly racist or classist, though it often is. It just has to preserve the status quo. And the status quo, because of decades of exclusionary zoning and discriminatory lending, is already deeply segregated by race and class.
When a community fights to prevent a multifamily development, they do not have to say they do not want poor people or people of color living nearby. They just say they are concerned about traffic, or parking, or the character of the neighborhood. The outcome is the same. The effect compounds over time.
Each blocked project means fewer homes. Fewer homes means higher prices. Higher prices mean the people who already own homes get richer. Getting richer gives them more political power to block the next project.
It is a feedback loop, a self-reinforcing machine of exclusion that gets stronger with every turn. Meanwhile, household sizes have been shrinking for decades. The average American household has gone from 3. 37 people in the mid-1960s to 2.
57 in 2024, a decline of nearly 24 percent. The country needs more housing units to shelter the same population: more single people living alone, more divorced couples each needing their own place, more elderly parents aging independently rather than moving in with their children. The demand for housing units has been growing faster than the population itself, even as the supply of new construction has been falling behind. The result of all of this, the federal withdrawal, the zoning calcification, the 2008 collapse, the labor shortage, the NIMBY veto machine, the rising costs, the shrinking households, is a national housing shortfall that most estimates now place between 3.
5 million and 7 million homes. The Federal Reserve Bank of St. Louis published a detailed analysis showing a cumulative shortfall of 3 to 5 million units since the financial crisis alone. Freddie Mac has estimated the gap at 3.
7 million. The National Association of Realtors has pegged the underbuilding over the last two decades at 6. 8 million units. The National Low-Income Housing Coalition says there is a shortage of 7.
2 million rental homes affordable to the poorest renters. No matter whose number you use, the picture is the same: America has a gaping hole where millions of homes should be, and it is getting worse, not better. Vacancy rates tell the same story from a different angle. Rental vacancy in 2024 was about 6.
8 percent, which sounds reasonable until you realize it is below the levels of the 1960s and gives landlords enormous pricing power. Homeowner vacancy was just 0. 95 percent, the lowest rate on record. In practical terms, there are almost no empty homes available for people to move into.
Every buyer competes against dozens of others. Every renter begs for a lease. Prices keep climbing because there is nowhere else for the demand to go. The consequences reach far beyond the real estate market.
When essential workers, the teachers, the nurses, the firefighters, the paramedics, cannot afford to live in the communities they serve, those communities start to break down. When young people cannot afford to leave their parents’ homes, they delay marriage, delay children, delay the very formation of the families that drive economic growth. When entire generations are locked out of home ownership, the wealth gap does not just persist. It accelerates.
The parents who bought Levittown homes for $7,900 in 1947 saw those properties appreciate into assets worth hundreds of thousands. Their children inherited that wealth. Their grandchildren built on it. The families who were excluded from that initial opportunity by race, by zoning, by the disappearance of affordable construction, are still paying the price.
They are not just behind. They are falling further behind every year, because in America, wealth begets wealth, and the single greatest engine of middle-class wealth creation has been shut down. Some places are starting to push back. Minneapolis made national headlines when it became one of the first major cities to eliminate single-family zoning citywide, explicitly citing the racist roots of the policy.
Oregon passed legislation allowing duplexes on all residentially zoned land statewide. California’s SB9, which went into effect in 2022, allows homeowners to split their single-family lots and build additional units. These are small steps, but they represent a philosophical shift. They say, in effect, that the right to build housing is more important than the right to prevent it.
At the federal level, there has been bipartisan interest in tackling the supply side. The Road to Housing Act, which passed the Senate with bipartisan support, aims to help cities streamline permitting, modernize zoning codes, and support housing innovation. Whether it will amount to meaningful change remains to be seen. The history of federal housing policy is littered with good intentions that died in committee.
The question today is not whether America can build affordable homes. It obviously can. The question is whether it wants to. And that is a much harder question, because the people who benefit most from the current system, the existing homeowners, the wealthy investors, the landlords, the politically connected developers, are also the people with the most power to keep things exactly as they are.
America built 17,000 homes in a single development in the 1940s, at a rate of one every sixteen minutes, for working families who had nothing but a paycheck and a promise. It stopped. A country that can put a rover on Mars, produce fighter jets that cost more than the GDP of small nations, and build stadiums and skyscrapers and data centers at astonishing speed cannot seem to build a simple three-bedroom house that a working family can afford. That is not a failure of engineering.
It is not a failure of resources. It is a failure of will, a choice made not in a single dramatic moment, but in 10,000 small ones: a zoning board meeting in a quiet suburb, a budget vote on Capitol Hill, a community hearing where someone stands up and says, Not here. Each of those choices on its own seems harmless. Together, they have created a country where the most basic human need, shelter, has become a luxury.
America used to build affordable homes. It stopped. And until it decides to start again, millions of its people will continue to pay the price for a promise that was made and then quietly, systematically broken.
