Why Can't I Afford a House?
Your grandparents bought on one income. You can't on two with two degrees.
TL;DR
In 1955, a home cost 2.4× median income. Today: 7.7×. This isn't market forces—it's policy. The 1986 Tax Reform Act froze apartment construction. Post-2008, institutional investors bought 500,000+ homes. Zoning laws written by existing owners block new supply. Names and dates attached.
"The problem was not her saving. The problem was the math. Home prices were rising faster than her savings account. She was running uphill on a slope that steepened as she climbed."
In 1989, a twenty-seven-year-old woman in Denver wanted to buy her first home. She had done everything right. College degree. Steady job at an engineering firm. She had saved diligently for four years, putting away 15 percent of every paycheck.
Her parents had bought their first house in 1972 for $28,000. Her father had been a machinist. They had saved for two years.
She had saved for four. And she was further from affording a house than when she started.
This is still happening. The slope is steeper now.
The Numbers
1955
2.4×
Median home cost vs. median income
A family could save for a few years and buy
2024
7.7×
Median home cost vs. median income
Two incomes, two degrees, still can't buy
This is not your failure. This is policy.
What Happened
October 22, 1986
The Tax Reform Act kills apartment construction
Section 469 created "passive activity loss" rules. Before: investors could deduct rental property losses against other income. After: they couldn't. The buildings stopped getting built.
Multifamily housing starts: 670,000 (1985) → 175,000 (1991)
74% collapse. The pipeline froze for two decades.
2008-2012
Private equity discovers an opportunity
The financial crisis created ten million foreclosures. The government rescued the banks. Homeowners were not rescued. Blackstone created Invitation Homes and started buying.
Institutional ownership: 0 (2010) → 500,000+ homes (2023)
In some zip codes, they control 50% of rentals.
Ongoing
Zoning capture prevents new supply
Existing homeowners control zoning boards. They block new construction because every new unit is competition. More supply means slower price appreciation.
No one who wants to build has a vote. Everyone who wants to block has a voice.
The Bidding War You Can't Win
When a starter home hits the market, it attracts two kinds of buyers:
Young Family
- ✗Needs a mortgage
- ✗Requires appraisal, inspection
- ✗30-45 days to close
- ✗Offer is contingent
Loses the house
Institutional Investor
- ✓Pays cash
- ✓No contingencies
- ✓Closes in a week
- ✓Offer is certain
Gets the house. Rents it back to you.
The seller picks the cash offer. Every time.
The Landlord Class Returns
The American Revolution was fought, in part, to eliminate a landlord class that extracted from those who worked without contributing. The founders understood that concentrated land ownership created dependency and undermined republican government.
What emerged after 2008 was the reconstruction of exactly that.
The New Lords of the New Manors
Invitation Homes
Blackstone subsidiary
American Homes 4 Rent
Public REIT
Progress Residential
Pretium Partners
FirstKey Homes
Cerberus Capital
The landlord class reconstituted itself in corporate form.
The generation locked out of ownership pays rent to these entities. The rent flows to shareholders. The shareholders are, disproportionately, the already wealthy.
The Receipts
Each step was a policy choice. Each was bipartisan. Each has names attached:
- →Tax Reform Act of 1986 — Public Law 99-514. Section 469.
- →Post-2008 bulk sales — Fannie Mae and Freddie Mac sold foreclosed homes to institutional buyers.
- →Local zoning — Controlled by existing owners who benefit from scarcity.
The people who made these decisions did not experience the consequences. The renters priced out of ownership did not draft Section 469. The families who lost bidding wars to Blackstone did not sit on zoning boards.
Frequently Asked Questions
Why can't I afford a house when my parents could?
In 1955, median home cost 2.4x median income. Today it's 7.7x. This isn't market forces—it's policy. The 1986 Tax Reform Act froze apartment construction. Institutional investors bought foreclosed homes after 2008. Zoning laws written by existing owners block new supply.
Why is rent so high?
Blackstone created Invitation Homes in 2012. By 2023, institutional investors owned 500,000+ single-family rentals. In some zip codes, they control 50% of the rental stock. When a family competes with a cash-paying fund for a starter home, the family loses.
What was Section 469 of the 1986 Tax Reform Act?
Section 469 created 'passive activity loss' rules that eliminated tax incentives for investing in rental housing. Multifamily housing starts collapsed 74%: from 670,000 in 1985 to 175,000 by 1991. The apartment pipeline froze for two decades.
Who is buying all the houses?
Institutional investors including Invitation Homes (Blackstone), American Homes 4 Rent, Progress Residential (Pretium Partners), and FirstKey Homes (Cerberus Capital). They pay cash, close fast, and convert starter homes to rentals. The landlord class reconstituted in corporate form.
Why can't they build more housing?
Existing homeowners control local zoning boards. They block new construction because every new unit is competition—more supply means slower price appreciation on their investment. No one who wants to build has a vote. Everyone who wants to block has a voice.
