Big Government Locks Young People Out of the American Dream

Last Thursday’s debate among the New York City mayoral candidates highlighted an issue that is among young Americans’ top concerns today: affordability. Democrat candidate Zohran Mamdani, the frontrunner, stated that affordability was the city’s most important problem. Independent candidate Andrew Cuomo and Republican hopeful Curtis Sliwa concurred, arguing the socialist Mamdani’s proposals are impractically expensive.

Mamdani’s emphasis on the affordability issue has benefited him politically, as young people in the city struggle to find decent, affordable housing and are increasingly willing to consider his agenda of greater government intervention and control.

That would be an awful mistake because socialism, regulation, and other government policies are what have caused the affordability crisis that has arisen across the United States. The current U.S. economy is anything but free, and the problems of today’s American economic system are caused almost exclusively by government. Young Americans’ struggles in achieving home ownership reflect the decline of economic freedom in the United States.

Government regulations directly increase the cost of housing, accounting for $93,870 of the $394,300 average price of a new home in the United States in 2021, about a quarter of the home’s cost, notes Paul Emrath, Ph.D., in a study for the National Association of Home Builders.

University of Central Arkansas professor Jeremy Horpedahl observes that “in 2023 it took 31 percent more hours of work to buy a square foot of the median home, compared with 1971.” That has its greatest effect on young households: with housing prices increasing rapidly, those who already have mortgages or fully own their houses gain an ever-greater economic advantage over the young. U.S. home sales in 2024 and 2025 are at their worst in 30 years, Fortune reports.

Gen Z’s Spending on Housing, Health Care

In addition, U.S. health care expenditures as a percent of GDP nearly tripled between 1960 and 2023, rising from 5 percent to 17.6 percent. The federal programs Medicaid and Medicare led to the rise in costs initially, and Obamacare brought on the rapid cost increases of recent years. Young people tend to spend less on health care than their elders, but the percentage increase is what counts here, and it is daunting. That puts further pressure on young people’s finances.

“Gen Z Americans are spending 31 percent more on housing and 46 percent more on health insurance than Millennials (age 28–43) did just a decade ago,” writes Michael Peterson at The Daily Economy.

High housing prices are keeping young people stuck on a rental treadmill. Apollo Global Management found the median age of a U.S. homebuyer was 56 in 2024, nearly double what it was in 1981, at 31, Econofact reports. Housing prices have been rising faster than household income for several decades: the median annual household income in the United States was $22,420 in 1984, and the median home price was $79,950. Those numbers rose to $83,730 and $418,975, respectively, in 2024. “This means the median family had to work for 3.6 years to buy a home in 1984, against 5 years in 2024,” Econofact reports.

That 28 percent increase in real housing prices hits young people the hardest. “As of 2024, only about 1 in 4 home buyers is a first-timer—the lowest share since the National Association of Realtors began tracking the data in 1981,” Today’s Homeowner reports. As a result, “the average age of a first-time home buyer has climbed to 38, up from 35 in 2023 and from the late 20s back in the 1980s. The typical first-time buyer now has a household income of $97,000, a jump of $26,000 in just two years.” That means younger middle-income people are being priced out of the market.

This is not a result of houses getting bigger: the average, inflation-adjusted price per square foot has been increasing in the past decade, and the median home size has decreased by about 7 percent during that time. The rapid increases in inflation-adjusted housing costs per square foot have multiple causes, nearly all of which boil down to demand outstripping supply by a large measure.

Regulations’ Cost

Prominent among these factors are increasingly restrictive zoning laws, mass immigration since 1965 (with 46 million immigrants living in the United States in 2022 — 13.8 percent of the nation’s population), a lack of construction since the 2007 housing bubble collapse, high crime rates, increases in mortgage interest rates (generally compensated by later decreases but hitting new homeowners hard during the high-rate times), and the flight to houses as more-reliable assets as decades of inflation have devalued the dollar by an appalling 87 percent since 1971.

The deficit in America’s supply of housing is significant. The mortgage guarantor Freddie Mac estimates the United States was short 3.7 million housing units in 2024. The number may be much higher. A July 2022 study found zoning reduced the number of homes built in the United States by 20 million, reporter Andrea Requier writes at USA Today. Meanwhile, rent control policies in urban areas reduce the supply of housing further and decrease homeownership.

These high housing prices are a political choice, not a free-market outcome. “The middle-class is under siege principally due to the escalation of land costs,” writes Wendell Cox of the Demographia analysis firm. “As land has been rationed in an effort to curb urban sprawl, the excess of demand over supply has driven prices up.”

“For decades in the high-income world, a hallmark of a strong middle class was the widespread ability to own a home,” Cox notes. This opportunity has been receding because of government policies, not market failure, as the overregulated housing market demonstrates.

The deleterious effects of government intrusions like those in the housing market have become the norm in the United States. High taxes, rapidly increasing health care costs since the adoption of Obamacare, energy prices raging higher as governments force an uneconomic switch away from fossil fuels and nuclear power, inflation caused by reckless government spending, the skyrocketing cost of higher education — all these and other increasing burdens have made the American Dream much more difficult to achieve.

Solutions

Far from being a failure of markets, the affordability crisis is a failure of government. Removing government-imposed impediments to the American people’s production and trading of goods and services is the solution.

President Donald Trump made an important move toward deregulation on the federal level this year by mandating that executive agencies repeal at least 10 existing rules, regulations, or guidance documents for every new rule they promulgate. It is up to Congress, however, to pass legislation to deregulate the nation’s economy and make it permanent: the number of “restrictive words” in the Code of Federal Regulations ballooned from 400,000 in 1970 to more than 1 million today.

The same is true on the state and local levels. Lawmakers must go through the regulatory statutes and remove those that impose costs greater than the estimated benefits (which are often overestimated and should be corrected). Emphasizing the costs of these regulations makes a strong case for their removal. States and localities that relax regulation and cut taxes will enjoy a further increase in the growing economic advantages that low taxes, less regulation, and greater market freedom bring.

Governments created the affordability crisis. The public must push lawmakers to reverse the damage they have done. That is what young people need to hear as they struggle to find their way in America’s woefully overregulated and overtaxed economy.