Goldman Says Looser Land Rules May Ease US’s Housing Squeeze

Goldman Sachs economists, led by Jan Hatzius, suggest that relaxing land-use regulations in major U.S. metropolitan areas could significantly ease the nation's housing affordability crisis. Their research indicates that if these areas adopted policies as loose as the least restrictive cities, an additional 2.5 million housing units could be added over the next decade, thereby expanding supply and addressing the current housing squeeze.

Analysis

A research note from Goldman Sachs economists, led by Jan Hatzius, presents a quantifiable solution to the sharp decline in U.S. housing affordability experienced over the last decade. The analysis posits that restrictive land-use regulations are a primary constraint on housing supply in major metropolitan areas. According to the firm's model, if these cities were to adopt policies as permissive as those in the least restrictive quartile, the national housing stock could expand by an additional 2.5 million units over the next ten years. This highlights regulatory reform at the local level as a significant, albeit politically complex, catalyst for alleviating the national housing crunch. The moderately positive sentiment and market impact scores indicate that the market views this as a credible, long-term pathway to increasing supply, shifting focus towards potential beneficiaries in the construction and real estate sectors.

Key Decisions for Investors

• Investors with exposure to the U.S. residential sector, including homebuilders and building material suppliers, should monitor municipal and state-level regulatory developments for signs of land-use deregulation, which would act as a powerful long-term growth catalyst.
• Consider overweighting positions in companies poised to directly benefit from a significant expansion in housing supply, particularly large-scale developers with land assets in or near supply-constrained metropolitan areas.
• Acknowledge that regulatory reform is a slow process; therefore, this analysis supports a long-term strategic allocation towards the housing theme rather than providing a near-term trading signal.