The $100,000 hidden tax on every home — and how to kill it

Housing consumes 30%-40% of a family’s budget, and for most families, it represents a tested path toward financial stability and wealth creation. Unfortunately, the previous administration’s rampant spending and overregulation caused record inflation, surpassing 9%. Costs jumped up; mortgage rates effectively doubled; Americans paid the price.

Together, the bureaucrat tax and former President Joe Biden’s inflationary policies have pushed homeownership further out of reach for too many Americans. In fact, the average age of first-time homebuyers has surpassed 40. When the housing supply lags behind demand, more buyers chase fewer homes, and prices climb. Today, the United States faces an estimated shortfall of 5 million to 7 million homes, a gap that has built up over the years and cannot be resolved overnight.

Unfortunately, the overregulation has a snowball effect on Americans’ quality of life, jobs, and ultimately, America’s GDP. America First Policy Institute’s recent housing poll found that over half of Americans have delayed a major life milestone, such as marriage, starting a family, moving for a job, or retirement. These challenges are especially pronounced among younger adults and Hispanic communities, with 59% of 18- to 34-year-olds and 61% of Hispanics reporting they postponed moving for a better job because of housing affordability.

These delays, driven by overregulation, not only hold individuals back from advancing economically but also weigh on the broader economy. According to the economic report, the cumulative effect amounts to an estimated 36% reduction in U.S. economic growth over the period studied.

Providing significant tax relief is a giant leap in making homeownership more affordable for American families. In contrast to the previous administration, the current administration fought to pass the most substantial tax relief bill, the Working Families Tax Cuts, in the One Big Beautiful Bill Act. Americans are just beginning to realize the benefits. Simply, the big tax relief bill saved Americans an average of $3,400 in taxes, savings that can be used directly as down payments or for home improvements. 

Beyond tax relief, the administration is taking action at the federal level to address regulatory costs. Just this week, Housing and Urban Development Secretary Scott Turner and Agriculture Secretary Brooke Rollins jointly rescinded the Biden-era green energy mandate, saving future homebuyers between $20,000 and $30,000. The rule would have required homebuilders to comply with the 2021 International Energy Conservation Code to qualify for certain government-backed mortgages, an added burden that risked slowing construction in an already undersupplied market. A welcome course correction. Though the previous administration’s regulatory fingerprints on policies like these are hard to shake off. Fortunately, we have a diligent team making progress.

Addressing the bureaucrat tax will require the federal government to incentivize action at the state and local levels. States that pursue meaningful reforms could unlock benefits for their residents, such as reduced mortgage rates for residents or prioritized HUD program eligibility in these deregulated markets. This federal leverage incentivizes communities to deregulate and streamline. The carrot, not the mandate, is the right tool here.

Deregulation can take many forms, such as updating building codes to recognize modular and other off-site construction methods as equal-quality alternatives to conventional site-built homes. A smart approach to reducing housing costs means embracing innovation, particularly in construction. 

Moreover, streamlining the development process through “shot clocks” — clear time limits on approvals — along with capped permit fees and transparent, predictable impact fees, can significantly reduce delays. Every day saved in the process translates to cost savings, bringing home prices within closer reach for more Americans.

The Trump administration has correctly identified the disease of the bureaucrat tax that makes it harder and more expensive to build. The treatment requires action, most notably at the local level. The American people are ready. Nearly three-quarters of voters in the AFPI poll support cutting red tape to reduce housing costs. The path forward is clear. Now let’s get to it.

Jill Homan serves as deputy director of Economy and Trade at the America First Policy Institute.

Michael Faulkender serves as co-chair for American Prosperity at the America First Policy Institute. He previously served as deputy secretary of the U.S. Treasury.