The middle-out project cannot hope to rebuild the American middle class without addressing America’s housing crisis, and it cannot address the housing crisis without building millions of affordable new homes.

There are of course other prerequisites for enjoying a happy and secure middle-class life—a good education, a stable income, and high-quality health care, child care, and elder care, to name a few. But there is arguably no greater threat to the aspirations of tens of millions of American families than our nation’s growing shortage of affordable housing. If we fail to amply address this crisis, middle-out will fail too.

The solution, unfortunately, is not what a nation infatuated with homeownership wants to hear. What America needs is a massive investment in building a public option for rental housing, affordably priced and perpetually owned outside the rent-seeking impulses of the private market. By issuing bonds against the revenue generated by future rents, local housing authorities can build millions of units of affordable middle-income housing at no cost to taxpayers. And if they patiently wait for inflation to erode the value of the money borrowed, this publicly owned housing will grow even more affordable over time.

All the tools we need to address this crisis are already in use. All that is lacking is the imagination and the will to use them at scale.

This is not magical thinking. Throughout America, public housing authorities are already charged with building affordable housing. To date, they have mostly focused on building subsidized housing affordable to very low-income households, an expensive endeavor that is limited by the scarcity of federal tax credits and other public and private grants. But the same interest-only bonds that housing authorities use to fund part of the cost of constructing subsidized low-income housing can easily be repurposed to fund all of the cost of building unsubsidized housing affordable to the middle class. Montgomery County, Maryland is famously already bonding against unsubsidized rents to build middle-income housing, and King County, Washington is preparing to tap into $1 billion of idle bonding capacity to potentially do the same.

So why has it taken so long for policymakers to dip their toes into such an obvious solution? Part of the problem is that “social housing”—the term of art used in policy circles—is a poisonous brand in the American context, distorting expectations on both the left and right. But by far the largest obstacle to a public option is the way our national obsession with homeownership has clouded our minds to both the costs and the benefits of owning a home. In fact, it wasn’t until I deconstructed my own privileged experience with homeownership that I fully understood how much I am personally part of the problem.

I bought my modest Seattle bungalow in 1997 when my daughter was just six months old. Twenty-eight years and hundreds of thousands of dollars of unrealized capital gains later, I have zero incentive to sell, for reasons I’ll explain shortly. This fact contributes to the very same affordable housing shortage that is enriching incumbent homeowners like me.

A big problem with homeownership is that we ask it to do the impossible: We want it to remain affordable to young families while at the same time serving as a magical tool for accumulating personal wealth. But a house can’t build wealth while remaining affordable. The math is the math. The less affordable my house becomes, the more housing wealth I build. In fact, purchasing a home is never really a great investment unless your home grows less affordable in relative terms.

But homeowners like me aren’t just profiting from our nation’s housing shortage. We’re also trapped by it.

Divorced, single, and an empty nester, I actually wouldn’t mind cashing out and downsizing, but in a relentlessly hot housing market like Seattle, downsizing just doesn’t make sense. I’d be hard pressed to rent an apartment I’d want for less than twice my current monthly housing costs, or to buy a desirable house or condo at a discount big enough to offset the substantial taxes, fees, and other costs I’d incur by selling my home. So, in a city struggling to cope with a growing shortage of affordable housing, a house in which the previous owners raised five children will remain home to just me and my dog. And I’m far from the only aging baby boomer stubbornly refusing to move on.

One of the more commonly repeated arguments in favor of homeownership is that you got to live somewhere, so why throw money away on rent when you could be building equity in your home? But this argument works both ways: You got to live somewhere, and so the equity in your home can be difficult or dangerous to tap. That’s why most financial planners advise that you not count your home equity when putting together a retirement plan, unless you plan on selling your home.

This helps explain the NIMBYist impulses of aging homeowners like me. We own expensive homes, but we don’t feel wealthy, because spending this wealth requires either selling our home or increasing our monthly costs by borrowing against it. And it’s an anxiety complicated by our relative lack of more liquid forms of wealth. In 2019, housing wealth accounted for between 50 and 65 percent of the total assets of middle-income households. Yes, it’s better to have housing wealth than not, but America’s overreliance on homeownership as our primary tool for building middle-class wealth has locked up the bulk of our wealth in our homes. No wonder most homeowners are quick to oppose anything they fear might threaten their property value.

The public option thus presents a dilemma to us anxious homeowners. In promising to reduce the price of rental housing, it also promises to reduce the high rate of home price appreciation on which we’ve grown to rely. No housing shortage, no double-digit returns. Yet the public option also gives us the option to get out of our homes and into affordable rentals in which to enjoy our retirement without fear of skyrocketing housing costs blowing a hole in our savings. And it does this by providing renters the most valuable benefit of homeownership: housing stability.

According to the U.S. Department of Housing and Urban Development, housing is considered affordable if the resident pays “no more than 30 percent of gross income for housing costs,” an arbitrary number set during the Reagan Administration for budgetary purposes that is arguably higher than the 25- or 20-percent ratio that should be our middle-out goal. But by any measure, the private housing market has spectacularly failed. Even before the pandemic, nearly half of all renters had crossed this 30-percent threshold, qualifying as “housing-cost burdened,” while nearly a quarter of renters were “severely” burdened, meaning they paid more than 50 percent. And it’s not just renters: Tens of millions of homeowners are struggling too, with 21 percent qualifying as housing-cost burdened in 2019. In fact, of the 17.6 million severely burdened households spending more than half their income on housing that year, 40 percent owned their homes.

I was once one of those severely housing-cost burdened homeowners, and I can tell you from personal experience that it totally sucks.

Some men muddle through their midlife crisis by having an affair or by purchasing a stupid-expensive car. My midlife crisis was more creatively self-destructive. At the age of 40, I abandoned the tech industry for a far less lucrative career as a political blogger and alt-weekly journalist, and from 2003 to 2013 I never earned more than $41,000 a year— often considerably less than that. At the time, my total housing costs (mortgage, insurance, property tax, and utilities) hovered around $2,000 a month—a bargain by Seattle standards, but a crushing 59 percent of pre-tax income in my absolute best of years. My one saving grace was that I never tapped into my home equity; had I availed myself of one of those adjustable teaser-rate refinancing deals that lenders were aggressively hawking in the heady years leading up to the 2008 financial collapse, I would have surely lost my house in the flood of foreclosures that followed. Ten million other homeowners weren’t so lucky.

The lesson I learned from my own dance with default was that when the shit hit the fan, it wasn’t homeownership per se that afforded my daughter and me the stable housing we enjoyed. It was a 30-year fixed-rate mortgage.

The truth is, homebuying is often more expensive than renting, and for most homeowners in most places over most periods of time, it’s not even that great an investment. The media tend to obsess on “hot” real-estate markets, but in vast swathes of the country, home prices are close to flat. Rather, it is housing stability, not affordability or wealth-building, that has been homeownership’s most valuable and reliable benefit.

The primary goal of the public option is to deliver stable housing to renters, too.

It is stable housing that enables us to lay down roots in the community and to build the relationships with our neighbors that we all rely on to get through even the most routine of times. It is stable housing that empowers our children to fully participate in their schools without living in constant fear of being uprooted from their friends, teachers, and classrooms. It is stable housing that is a prerequisite for the “continuity of community both for old residents and for newcomers” that the pioneering urbanist Jane Jacobs explained is so crucial to maintaining the vitality and diversity of neighborhoods. It is stable housing that provides the peace of mind necessary to go back to school or to start a business or to embark on the 22-year adventure into policy wonkery that led to the writing of this sentence.

Without housing stability, a house can never truly be a home. And for most homebuyers, this stability is provided not through homeownership itself, but through a 30-year fixed-rate mortgage. How can we possibly provide comparable stability to renters? Well, if you think about it, a fixed-rate mortgage is really just a form of rent control.

Literally.

Because housing is expensive, it is rarely purchased or built without financing; and because interest is a form of rent, that makes us all renters. Whether we are paying a mortgage or paying a lease, we are all essentially renting money—either directly from a bank in the case of mortgage borrowers, or indirectly through a landlord in the case of renters. But an important difference between renting and owning is that few residential rental leases guarantee a stable rent for more than a year, whereas a 30-year fixed-rate mortgage locks in your “rent” month after month for three decades. It was in fact the rent control inherent in my 30-year fixed-rate mortgage that ultimately kept my daughter and me in our house.

The public option would function as a form of rent control too, but unlike that imposed by some cities on the private market, it would both stabilize rent and massively add to supply. It would achieve this by tapping into a vast and underutilized store of capital: the voluminous borrowing capacity that many municipalities enjoy. By collateralizing interest-only bonds against future rents, the public option serves as a conduit for renters to collectively borrow cheap money at fixed rates for long terms with no taxpayer subsidy.

That said, the federal government spent $243 billion incentivizing homeownership in 2022, largely through the mortgage interest deduction, property tax deduction, and capital gains exclusion—subsidies that disproportionately benefit higher-income households—so a little bit of help for a public option more than makes sense. The feds could make “Affordable Housing Bonds” (AHBs) even cheaper through rulemaking that assures these bonds would be tax-free, and by supporting the AHB market through the Federal Reserve or a government-sponsored enterprise (GSE) such as Fannie Mae. The cheaper the money, the more affordable a public option can be.

It is by deconstructing housing down to this core economic component—the cost of money—that we can begin to see the AHB-financed public option for what it is: a potentially revolutionary financial innovation. Beginning in the 1930s, it was the fixed-rate mortgage that transformed the American housing market by locking in monthly payments for at first 15-, then 20-, then 25-, and eventually 30-year terms. It is through a similar innovation—the rent-collateralized AHB—that the public option could deliver to renters all the stability of a fixed-rate mortgage without any of the risks or hassles of homeownership, and at a substantially lower monthly cost.

A public option can charge rents that are more affordable and stable than the private market because it enjoys several unique advantages. The first is that it is not-for-profit. Obviously, this means that there is no profit margin to tack on to rents. But it also means that a public option leaves policymakers free to make different choices. For example, where a private developer will tend to build the most profitable development a parcel can support (and that generally means building more upscale), a public option can aim squarely at the missing middle. The main constraint on a public option is that the rent collected must be sufficient to cover its total costs—and a public option’s largest cost is by far the cost of the money.

This brings us to the second advantage a public option enjoys: cheap money. A public option can borrow money far more cheaply than a private developer can because it has access to the tax-free municipal bond market, where rates are low and terms are long. Furthermore, given sufficient market support from the Federal Reserve or a GSE, the principal borrowed could potentially be carried by the housing authority indefinitely, as is often the practice with government debt. Thus, unlike a 30-year fixed-rate mortgage, it is only the interest due on the principal that need be passed on to renters.

Imagine constructing a 200-unit housing development at a total cost of $55 million. That’s $275,000 per unit. If the project is financed by AHBs at 4.5 percent interest (roughly the yield on a 30-year tax-free interest-only AAA municipal bond at the time of this writing), then $1,031 per unit per month in financing costs would need to be passed on to renters. That’s the cost of the money to the renter: the cost of construction (or purchase of an existing building) as transformed by the terms of the financing. Because the public option is not-for-profit, there is no profit margin to tack on to the cost of construction.

By comparison, imagine the same apartments sold as condominiums in the private market for $50,000 per unit above cost (a fairly typical 18 percent profit), with homebuyers putting $50,000 down and financing the remainder through a $275,000 30-year fixed-rate mortgage at a 7 percent APR (again, the going rate at the time of this writing). The exact same unit would cost the buyer $1,830 a month in principal and interest. That’s the cost of the money to the buyer: the cost of construction plus profit as transformed by the terms of the financing. Yes, the condo owner is building “equity,” but that is not an option for renters who can’t afford an extra $799 a month, let alone a $50,000 down payment.

Of course, the cost of the money is not an apartment’s only monthly expense, whether it is a public option, a condo, or a market-rate rental. Property investors often rely on “the 50 percent rule” to budget 50 percent of rental income to operations and maintenance (condo owners incur similar costs in homeowners association fees, property tax, insurance, maintenance, etc.). So let’s assume that in year one a public option would have to charge rent equal to about twice a unit’s cost of money in order to cover total expenses. In the example above, that comes to $2,062 a month—a rent affordable at the 30-percent threshold to households earning $82,480 a year, about 102 percent of the 2023 national median household income.

But while the cost of the operating half of the initial monthly rent must rise with inflation, the cost of the money half will not. Assuming that incomes keep pace with inflation (and they typically rise slightly faster), after ten years of 3 percent annual inflation the rent should be affordable to households earning 89 percent of the median. By the twentieth year, the rent would be affordable to families earning 79 percent of the median, just within the official definition of “low-income.” As inflation erodes the cost of the money over time, the rent grows more affordable.

This would be similar to the way that homebuyers with fixed-rate mortgages benefit from inflation. Because mortgage payments are fixed in current dollars at the time of purchase, they grow steadily cheaper over the years. But this benefit is attached to the owner, not to the home. Each time a home changes hands, its price resets to the ever-climbing market rate. Unless incomes rise faster than home prices (and in the bottom nine income deciles, they don’t) or interest rates fall below the rate of inflation (and home prices tend to rise faster when interest rates are low), homeownership grows less affordable for each new generation of homebuyers than for the last. Contrast that with the public option, where the rents grow more affordable regardless of how often each apartment changes hands.

But surely, this can’t go on forever—when the bonds come due, won’t the cost of the principal have to be reflected in the price of the rent? Not necessarily. Yes, the bonds must be redeemed at face value when they mature in 30 years, but the housing authority can simply issue another $55 million in bonds to pay off the old ones—and this time it will have an actual income-producing property to collateralize, rather than just the promise of one. Furthermore, thanks to inflation, that $55 million won’t be nearly what it used to be. In fact, after 30 years of 3 percent annual inflation, that $55 million would be worth the equivalent of only $22 million. After another 30 years, just $9 million. And so on, until the principal due is hardly worth thinking about at all.

In a public option, inflation is our friend because it relentlessly eats away at the single largest component of rent: the cost of the money. Of course, the same is true of fixed-rate mortgages and the debt that finances market-rate rentals. But renters don’t benefit from the declining cost of money in the private market because market-rate rents aren’t determined by costs. They are determined by the market.

Imagine two identical housing developments, side by side, each consisting of 200 identical units—one developed as market-rate rentals, and the other as a public option. To simplify the math, let’s again assume that each development cost exactly $55 million to complete—or $275,000 per unit—from land acquisition to construction to the celebratory opening day balloons.

Which do you think will offer the more affordable housing?

Of course, it’s the public option. Because private developers need to tack on a profit while a public option merely passes on costs, a public option can’t help but be more affordable. But I know what you free marketeers are thinking: This is a straw man argument. Surely private developers can build far more cheaply and manage more efficiently than some bloated quasi-governmental bureaucracy. That’s the magic of market competition. The Invisible Hand and all that.

Well, maybe. I’m not anti-market. The market is a powerful tool for evolving new solutions to human problems. But the advantages provided by the public option are predicated entirely on public ownership, not on public construction. A public option could still use the same private architects, engineers, construction companies, building management firms, etc. as private developers, with the services all put out for competitive bids. Hell, housing authorities already contract with private developers. So, there’s no good reason why the cost of building and managing a comparable development under a public option should be substantially higher than in the private market. But to put the cost objection to bed, let’s modify the terms of our thought experiment.

Imagine two identical housing developments, side by side, both constructed by the same private developer. One building is sold for $55 million to private investors to be operated as market-rate rentals; the other is sold for $55 million to a housing authority to be operated as a public option. Furthermore, both the private investors and the housing authority contract with the same property management firm under identical terms to operate their respective buildings.

Which do you think will offer the more affordable housing?

Obviously, it’s the not-for-profit public option.

Okay, but what if the private investors are savvy? What if they out-negotiate those lazy bureaucrats at the housing authority and purchase their building at a discounted price of just $50 million? No, wait… $45 million. Now which building do you think will offer the more affordable housing?

Again, it’s the public option, because all this talk about cost misses the point. Market-rate rents aren’t determined by cost. They’re determined by the market. The market will charge whatever the market will bear, and if there’s anything we know from the fact that half of all renters are housing-cost burdened, it’s that the market often bears a much higher rent than the 30-percent threshold generally accepted as “affordable.”

There is a loud contingent of (mostly) well-intentioned urbanists in Seattle and elsewhere who argue that the simple fix to our housing affordability crisis is land-use reform. As much as 80 percent of Seattle’s residential land is zoned single-family, and where multi-family housing is allowed, height and density are often severely restricted. My own house sits on a 6,800-square-foot corner lot in a neighborhood that feels much more suburb than city. My backyard has plenty of room for my dog to chase squirrels, and we both eat a ton of fresh vegetables out of our organic garden. It’s nice. But in a city that’s growing increasingly unaffordable to working- and middle-class families, it’s hard to defend the “exclusionary zoning” that preserves the enviable lifestyle of my dog.

The land-use reformers aren’t wrong: Exclusionary zoning pushes up housing prices by creating an artificial shortage of buildable land. We need land-use reform. But if we truly want to build more affordable, diverse, and equitable cities, land-use reform is not enough. The market cannot fix this crisis on its own—an assertion I base on the fact that the market does not fix this crisis on its own virtually anywhere, land-use policies be damned.

For example, Houston, with its minimalist zoning, is often held up as the epitome of an unfettered housing market that works. In Houston, private developers can pretty much build whatever they want, wherever they want, even in well-charted flood plains—a feature of Houston’s land-use regime that came to national attention in 2017 after Hurricane Harvey flooded more than 96,000 homes. In fact, a year into Houston’s post-deluge cleanup, one in five new housing permits were still being issued in flood plains, because why the hell not?

Sure, housing may sometimes be surprisingly soggier in “Hustle Town” than here in “Rain City.” But as advertised, it is also far cheaper. According to a housing affordability index compiled by the real estate investment site RealtyHop, Houston’s median listed home price in February 2025 was less than half that of Seattle’s—just $356,457 compared to $799,000. Pretty impressive. But does that make Houston twice as affordable?

At the median? No.

Remember, affordability is the ratio of housing costs to income, and because household incomes in Houston are also about half those in Seattle, the ratio of cost to income was a fairly comparable 43 percent and 45 percent respectively. At the median, Houston’s renters don’t seem to benefit at all from its laissez-faire zoning, paying 32 percent of household income in gross rent, according to 2023 Census data, compared to 26.7 percent in Seattle. If anything, the affordability ratio overstates Houston’s affordability. After all, spending 43 percent of Houston’s $65,087 median income on housing leaves a lot less “residual income” for other expenses than spending 45 percent of Seattle’s $124,992 would—and while houses may be two to three times pricier in Seattle than in Houston, cars, food, clothing, vacations, and most other expenses are about the same.

Turns out that at the median, flooded bargain-basement Houston is arguably less affordable than high-cost Seattle.

But what truly stands out from the affordability data is the market’s remarkable efficiency at extracting burdensome income shares across a broad range of median home prices and incomes. According to the RealtyHop index, 80 of our nation’s 100 largest cities score an affordability ratio above the 30-percent threshold, from cut-rate Milwaukee ($206,200 median listed price) to exorbitant San Francisco ($1,099,000) and a diversity of local economies and land-use regimes in between. And for renters and homeowners alike regardless of locality, the lower your income, the greater your housing-cost burden.

Advocates argue that land-use reform would substantially increase the supply of housing in Seattle and other communities where density is severely restricted, and that is almost certainly true. It may even make housing less unaffordable. But there is simply no empirical evidence that increasing the supply of new market-rate housing would achieve the goal of delivering stable and affordable homes to the middle class.

It’s not that “supply and demand” isn’t a thing. It’s just that it’s a lot messier than the Econ 101 diagram suggests. Market-based solutions assume a textbook relationship between the quantity of housing and its price: Increase the supply and the price will fall. But price is only one variable among many that drive demand, while supply is as much a question of what as it is of how many.

Orthodox economic models rely on the notion of “substitution” to help keep supply and demand in balance. For example, if apples get too expensive, you might substitute them with oranges or pears. Or maybe dried apples, or an apple fritter, or a big fat slice of apple pie à la mode, or as long as you’re eating all those carbs you might as well just go out and enjoy a couple pints of artisanal cider. The point is that your demand for apples is “elastic”: Because there are so many other adequate substitutes and substitution is virtually “frictionless,” as the price of apples goes up, your demand for them will fall. This demand elasticity helps put a cap on the price of apples.

But it doesn’t work that way in the housing market, where friction is extraordinarily high. Unlike apples, substituting one home for another is expensive and disruptive, and the choice of adequate substitutes is much, much more limited. For example, when the price of apples goes up you don’t spend a month or three searching for the right pear. And when you find it, you don’t need to put down three months’ worth of pear purchases as a deposit (an amount that could be equal to a month or two of pay!), assuming the pear’s owner even chooses you over all the other people eager for that particular pear. If you do make the substitution, you don’t need to pack up all your belongings and rent a truck to move to where the pear is; you don’t need to pull your children from their schools or find different daycare; and you don’t need to potentially take on a longer or more costly daily commute. Substituting pears for apples never pulls you and your children out of your home and your community and away from all the friends and neighbors you’ve come to know, trust, and love. There’s simply a lot more friction in the housing market than there is in the supermarket. This helps explain why, while produce prices fluctuate from time to time, you have likely never gotten a letter from your landlord announcing that they have unilaterally decided to lower your rent.

In econspeak, we’d say that demand for housing is income and price inelastic—that demand remains strong even as prices rise or incomes fall. This gives landlords a lot more leverage than apple-lords: They know that when the rent goes up, we’ll probably try to cut back spending on other things (maybe fresh fruit) before going through the hassle and expense of moving. And if we can’t pay the rent, our options are limited to…well…housing. We might be forced to substitute our house with an apartment, or our current apartment with a smaller, crappier one at a less desirable location. But unlike with apples, it’s not like we can adequately substitute our demand for housing in general from a broad array of other consumer goods like, say, a car or a tent or a cardboard box. Though, of course, some people do, which is part of the crisis we’re trying to solve.

In the end, we all got to live somewhere, and if all the options are expensive, we must either pay the price or do without. Higher-income households at least have the entire range of price levels to choose from, but the lower your income, the fewer your options and the more intense the competition for what few options you have. To borrow another econspeak term, our affordable housing crisis is a classic example of a “market failure.” And it’s not a failure that private developers seem able to address.

Don’t get me wrong: Unencumbered by land-use restrictions and left to their own devices, I’ve no doubt that private developers would continue to drive down the price of upscale housing, because in cities like Seattle, that seems like all they ever build. Despite our restrictive zoning, I’ve seen a lot of new construction in and around my neighborhood over the past quarter-century, and not a single new home was built to be more affordable than the one it replaced. Not one. It never happens. Where infill development occurs, these new homes invariably sell at prices substantially above the median for the surrounding neighborhood, and even on those lots zoned multi-family, every individual new townhouse or condo or rental is by itself more expensive than the single-family home that once stood in its place. Yes, if Seattle is to grow more affordable, it must grow denser. But density alone does not guarantee affordability.

Free marketeers tend to shrug this off, pointing to lower-priced housing in older buildings as a circle of life sort of thing: All this pricey new construction will someday form the affordable housing stock of the future, they assure me, as age, entropy, and I suppose neglect reduce relative demand for it over time. Uh-huh. It’s like if the automobile industry only produced luxury vehicles on the promise that the used car market would eventually serve everyone else. Sure, a “preowned” BMW is cheaper than new. But “less unaffordable” and “affordable” are not the same thing. Besides, all those moldering buildings in funky old neighborhoods that once housed my equally poorly paid alt-weekly colleagues are quickly being renovated or replaced by luxury apartments aimed at waves of new e-bike-mounted tech workers desperate for a pleasant commute to their no doubt brutally dehumanizing six-figure jobs.

Petulant editorializing aside, America can’t luxury-build itself out of its affordability crisis. It just can’t.

For though land is limited, people, businesses, and financial capital are not, and that makes local housing markets not nearly as local as they first appear. Seattle may be expensive compared to Houston, but as long as it is far cheaper than other tech hubs like San Francisco, Silicon Valley, and New York, it will continue to attract new jobs and workers, driving up demand for housing. And if rents were to somehow stabilize below the maximum extractable share of income the market currently enjoys, global capital would rush in to exploit this inefficiency, buying up undervalued properties and hiking rents.

My use of the word “inefficiency” in the previous sentence is not entirely flippant, for if you choose to trust your Econ 101 textbook rather than me, you might recognize our uniformly high cost of housing as a share of income by yet another econspeak term: the “equilibrium” or “market clearing” price. This is supposedly the price at which supply equals demand, the market clears, and equilibrium is reached. The affordability data strongly suggests that the market believes the equilibrium price to be substantially higher than the conventional 30-percent threshold, let alone a more ambitious middle-out goal. Quite simply, half of all renters pay more than 30 percent of their income on housing because the market has determined that they can. If through some momentary spasm of overbuilding private developers were to push down housing prices to a more affordable and less profitable level, the market would inevitably respond to this disincentive by slowing new construction until the market clears, prices rise, and equilibrium is restored.

Ultimately, the reason why the market can never fix this problem is that it does not see it as a problem.

A public option is immune to all these market forces. It could not care less about profit. It will build toward the middle, not toward the top, because that is its mission; it will add supply in the face of falling prices because pushing down prices is its goal. Through the municipal bond markets, it will enjoy cheap access to global capital, but by perpetually maintaining ownership outside of the market, it will assure that global capital can never jump in to exploit the growing gap between what renters are paying in a public option and the “equilibrium price” the market could otherwise force them to pay.

But the public option isn’t just immune from the market; built at scale, it will eventually come to shape it. As a public option grows to become a dominant player in a local housing market, and as its rents grow more affordable, market-rate landlords will feel increasing pressure to compete on price. It may take time, but once it is operating at scale, a public option built to directly serve the needs of middle-income households will inevitably improve the lives of low-income renters as well.

To be clear, the public option is not socialism. It does not replace the private market. In fact, it relies on the market for all of its inputs, including its financing. Rather, it simply provides an affordable option in the bottom half of the rental market where robust price competition between landlords is currently lacking. In this sense, I think it is fair to describe the public option as pro-market in that it makes the housing market more competitive—and it is competition, after all, that drives the market to better serve consumers. If that strikes you as too much of a rhetorical stretch, you must at least admit that the public option is no less pro-market than any of the existing government interventions—the Low Income Housing Tax Credit, rental assistance vouchers, the 30-year fixed-rate mortgage, the mortgage interest deduction, the capital gains exclusion, the capital gains step-up basis, local property tax abatements, etc.—from which realtors, property owners, and private developers currently profit. I mean, if you want to argue for keeping the government out of your housing market, at least be consistent about it.

If the public option works—if it reshapes our housing market into one that is far more affordable and stable—then the outsized capital appreciation that anxious homeowning boomers like me have come to rely on will inevitably become a thing of the past. Sure, there will always remain a premium on houses like mine; one thing Seattle can never make more of is charming century-old craftsman bungalows on 6,800-square-foot corner lots. But given an abundance of affordable rental options, future homebuyers will not be so desperate to bid up the price, creating a feedback loop that pushes down appreciation. That may come as a shock to homeowners accustomed to home prices rising at rates far beyond historical norms. But if we really want housing to be affordable and stable, that is the stable and affordable housing market we should want to create.

Which leads me to close on a skeptical note: Public option or no, I’m not convinced that this is the housing market most Americans want to create.

Throughout Seattle and other liberal strongholds, you will find tidy million-dollar homes with “Hate Has No Home Here” signs proudly planted in their yards, and while I do not doubt my neighbors’ good intentions, they seem to have little awareness that their political values and their property values might not entirely align. To paraphrase Upton Sinclair, it is difficult to get a homeowner to understand something when their home equity depends upon them not understanding it. But should they come to understand that the choice we face is between the affordable and inclusive housing market we say we want, and the relentlessly hot market our retirement plans expect, I am not confident that most of my neighbors would proactively choose the former.

Still, at least we have a choice.

Our affordable housing crisis is not the inescapable product of a rational and efficient market; it is a consequence of the policies and preferences we have chosen to pursue. If we want to rebuild America from the middle out, we need to build a shit-ton more housing. All the tools necessary to build this housing already exist. We need only choose to use them.