Originally published at The Daily Signal. 

The federal government’s grip on America’s housing finance system is contributing to the very affordability crisis it claims to solve.
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Fannie Mae and Freddie Mac, two government-controlled mortgage giants, now back more than half the $16 trillion residential mortgage market. While they don’t issue loans directly, they purchase mortgages from lenders and securitize them, funneling credit through a government-directed system that distorts prices, encourages risk-taking, and leaves taxpayers exposed.

Now, under the direction of Federal Housing Finance Agency Director Bill Pulte, the Trump administration has reopened the long-stalled debate over what to do with these entities.

President Donald Trump recently pledged to take Fannie and Freddie public again, and Pulte has said the administration is considering how to do so while still keeping them in federal conservatorship. This contradictory posture—suggesting privatization while maintaining government control—has left markets, lawmakers, and taxpayers uncertain.

That uncertainty matters because the status quo is already creating long-term damage. Fannie and Freddie have been in conservatorship since the 2008 financial crisis, when their collapse required a $187 billion bailout funded by taxpayers. That was supposed to be a temporary fix. Instead, they’ve become permanent fixtures of the federal housing system, with an outsized footprint that crowds out private competition and weakens the incentives for prudent lending.

Nevertheless, the Trump administration is right—privatization is the answer here. However, it must be real privatization. While the White House can take a phased approach to removing their conservatorship, eventually, it must come off. 

Critics of reform argue that ending federal backing could lead to higher mortgage rates. But those same critics ignore the long-term cost of the current arrangement. When lenders and investors operate with the understanding that the federal government stands behind their losses, the result is a mispricing of risk. The implicit guarantee that Washington will step in when things go south may keep rates lower in the short term, but it inflates home prices, misallocates credit, and leaves taxpayers holding the bag when the cycle turns.

The government’s role has also expanded in troubling ways. In January, the FHFA raised conforming loan limits to a record high of $806,500. These loans are now eligible for federal backing, meaning taxpayers subsidize million-dollar mortgages. That’s not a policy targeted at helping working families. It’s a distortion that inflates demand in already expensive markets and rewards politically connected interests at the expense of long-term affordability.

Meanwhile, the real challenge—supply—goes largely unaddressed. According to Axios, the U.S. faces a shortage of nearly 4 million homes. Easier credit does nothing to solve that. In fact, when supply is constrained, subsidizing demand only pushes prices higher. 

The solution isn’t more government-backed debt. It’s more homes. And that requires less regulation and more room for private capital to operate.

According to the National Association of Home Builders, nearly $94,000 of the cost of an average new home is attributable to local, state, and federal regulation. Those barriers choke off new construction, especially in places where demand is strongest. The answer isn’t more government-subsidized credit; it’s a freer, more responsive market.

We’ve already seen the benefits of private capital stepping in to increase supply. Private ownership of newly built rental units has grown sharply—by nearly 70% in some areas—bringing stability and options to markets that would otherwise be constrained. Yet instead of encouraging this private-sector dynamism, some in Washington want to shut it down. Lawmakers have floated proposals to ban corporate homebuyers, cap investor purchases, or impose new restrictions on private equity in housing.

These misguided efforts mirror the broader failure of Washington’s housing policy: punishing private capital while doubling down on federal programs like Fannie and Freddie that drive up costs and distort incentives. Instead of vilifying the private sector, policymakers should welcome its role in helping lower housing costs and increasing housing supply. Privatizing Fannie and Freddie would represent a great place to start.

Fannie and Freddie were never meant to be permanent arms of the federal government. Their continued dominance—underwritten by taxpayers and controlled by regulators—creates a housing system built on political priorities instead of market signals.

Privatizing them would correct these distortions. It would restore risk-based pricing to mortgage markets, reduce taxpayer exposure, and invite new entrants and innovation into the system. A phased release from conservatorship—paired with a clear plan to reduce implicit guarantees—would allow a competitive private housing finance market to emerge, while maintaining stability during the transition.

​Preserving the current model doesn’t protect affordability—it protects dysfunction. If the Trump administration is serious about improving access to housing and restoring fiscal responsibility, it must finish the job: end the conservatorship, get government out of the way, and let the housing market function like a market again.

​Why is housing so expensive in many cities—and is the government making it worse?

In this episode of the Let People Prosper Show, I interview Dr. Emily Hamilton, senior research fellow and director of the Urbanity Project at the Mercatus Center. We explore the big questions in housing policy: What drives rising costs? How do land-use regulations distort supply? And what reforms would make it easier for families to afford homes?

Dr. Hamilton is a leading voice on urban economics and has worked extensively to evaluate how government decisions, particularly at the local level, restrict housing development and make affordability harder to reach for many Americans. We break down the challenges of the modern housing market through a free-market lens, offering real solutions that expand opportunity, protect property rights, and let people prosper.

For more insights, visit vanceginn.com. You can also get even greater value by subscribing to my Substack newsletter at vanceginn.substack.com. 

(0:00) – Introduction to Housing Policy and Urban Economics
(8:41) – Understanding Land Use Regulations
(17:49) – The Role of Government in Housing
(26:49) – The Impact of Institutional Investors
(35:22) – Current Challenges in the Housing Market
(39:30) – Future Outlook for Housing

For many American families, homeownership—a cornerstone of the American Dream—is slipping further out of reach. Housing prices continue to rise, and even renting has become more expensive, leaving families feeling squeezed on all sides.

There are signs of hope. Several states are taking action this legislative cycle, exploring ways to reduce or eliminate property taxes. But more can and should be done—at both the state and federal levels—to make homeownership more affordable. Smart policy reforms won’t just benefit buyers; they’ll also help lower rental costs, easing the pressure on families across the board.

For more insights, visit vanceginn.com and get even greater value with a subscription to my Substack newsletter at vanceginn.substack.com.

​Originally published at Texans for Fiscal Responsibility.

Texas is at a critical point in addressing its housing affordability crisis. As the property tax burden on Texans is at historic highs, the State’s housing market faces serious challenges that drive up costs and limit access to affordable homes. Solving this crisis requires a bold approach to removing restrictive zoning laws, reforming property taxes, and pursuing paths that enable true homeownership.

Property Taxes are Soaring, Limiting Homeownership
Property taxes in Texas have risen sharply in recent decades. Data from Texas Comptroller shows that total property taxes in Texas have skyrocketed from nearly $19 billion in 1998 to over $81 billion in 2023—a staggering 328% increase over 25 years. Most of this growth comes from school districts and local governments, where spending has far outpaced population growth and inflation. Despite the recent relief push, property taxes remain an ever-growing burden, keeping many Texans from achieving affordable homeownership.

Restrictive Zoning Laws Inflate Housing Costs
Restrictive zoning policies are another roadblock to affordable housing. By limiting where and what types of homes can be built, these zoning restrictions constrain housing supply, causing prices to rise. Opening up zoning could allow developers to build more homes, increasing competition and reducing costs for prospective buyers and renters. Such zoning reforms would enable the Texas housing market to meet demand more effectively, driving down prices and making homeownership more attainable for all Texans.

The Case Against Rent Control and for Free-Market Solutions
Some advocate for rent control to address housing affordability, but this policy only exacerbates the problem. Rent control limits lead to reduced housing supply, lower property maintenance standards, and an overall decline in housing quality. Texas should adopt free-market solutions instead of price controls that distort the market. Reducing zoning restrictions and property taxes provides a far more sustainable approach, encouraging private investment and expanding housing options without compromising quality.

A Path to Property Tax Elimination
True homeownership means owning a home without a continuous tax burden. For Texans to experience this freedom, we need a serious commitment to eliminating property taxes. Here’s a practical approach:

1. Close Loopholes and Enforce Levy Limits: Many local governments exploit loopholes to bypass levy limits, defeating the purpose of voter-imposed controls. Enforcing a 0% threshold for property tax hikes without voter approval would prevent local entities from sidestepping taxpayers’ voices.
2. Limit State and Local Spending: Effective property tax reform requires disciplined spending control. Limiting state and local government spending, combined with strict fiscal caps, would prevent the spending growth that drives up property tax rates.
3. Use Surplus Revenues to Reduce Property Tax Rates: Texas can use budget surpluses to gradually phase out property taxes, with the state cutting school district maintenance and operations (M&O) tax rates and other local governments eliminating their property taxes. This surplus-driven approach would allow for a consistent reduction in property tax burdens until zero, without jeopardizing critical public services.

Learning from Other States
Several states are already exploring ways to move away from property tax dependence. For instance, North Dakota and Wyoming could soon eliminate property taxes, offering a potential model for Texas. By setting ambitious targets, these states show that property tax elimination isn’t just an idealistic vision—it’s a practical policy choice that puts residents on the path to true home ownership.

Political Courage is Key
Implementing these solutions requires political will and determination to prioritize Texans’ well-being over short-term spending interests. Texas lawmakers need to recognize that high property taxes are not just an inconvenience—they’re a barrier to affordable living, an obstacle to homeownership, and an economic drain that weakens communities. Texas can lead the nation in housing affordability and economic freedom by reducing zoning restrictions, enforcing strict levy limits, and working toward eliminating property taxes.

Conclusion: A Sustainable Solution to Housing Affordability
The housing affordability crisis in Texas won’t be solved overnight, but a commitment to sustainable, free-market reforms can provide real relief. By removing restrictive zoning, eliminating property taxes, and rejecting failed policies like rent control, Texas can make homeownership affordable and achievable for more people.
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Now is the time to pursue policies that support true homeownership, economic freedom, and prosperity for Texans. Let’s choose a path that addresses the root causes of our housing crisis, unleashing the potential for a thriving, accessible housing market.

Chairman Bettencourt and members of the committee,

Thank you for holding this hearing. I am Dr. Vance Ginn, president of Ginn Economic Consulting, Texan, and father who is concerned about Texas's housing affordability crisis. While the state can’t address general inflation and interest rates, as those have been failures of Washington, policymakers can tackle restrictive local zoning and high property taxes.

First, restrictive zoning regulations restrict the housing supply, driving up housing prices faster than many can afford. 

• Reducing these housing restrictions imposed by mostly local governments can increase the housing supply, helping lower prices. Less restrictive zoning isn’t just good policy; it’s essential for making Texas affordable. The high cost of rent control, zoning rules, and other government failures highlight the importance of free-market solutions.

Second, regarding the 11th most burdensome property taxes, achieving affordable housing means committing to eliminating them. ​