Housing affordability has reached crisis levels in many areas of the United States, including some places in Texas. Policymakers at every level are debating solutions, from restricting institutional investors to expanding supply, though disagreement remains over the root causes.
Sean Dobson, CEO of Amherst Group, says the problem stems from government policy decisions that distorted the market and limited access to housing.
Dobson leads Amherst Group, an Austin-based financial services platform focused on single-family housing and mortgage markets. His firm played a role in advising policymakers and investors during the 2008 financial crisis, using proprietary data and research to analyze risk in housing finance.
Dobson says the foundation of the U.S. housing system remains strong, particularly the 30-year fixed-rate mortgage.
“The 30 year fixed rate mortgage is kind of the envy of the world,” he says. “It’s a really nice piece of financing for consumers. And it’s created a lot of wealth for consumers.”
He explains that this structure gives homeowners flexibility and long-term stability, though it creates complexity for investors trying to predict outcomes.
Rising home prices, he says, are not mysterious. “Home prices today, relative to historical norms of affordability, are about as unaffordable as they’ve ever been,” he says.
Dobson attributes that shift to monetary policy decisions that flooded the market with cheap capital at the wrong time. “We flooded the market with low rate mortgages at the same time consumer incomes were growing,” he says. “It creates this exponential growth in buying power.”
That surge in demand collided with limited housing supply. “The housing market can’t react to these sudden changes in demand,” he says. “So the price goes up.” He adds that once interest rates rose again, the market locked up.
“If you have a 3% mortgage and the new interest rates are seven, you’re going to pay four points higher on the same house,” he says. “So why would you move?”
According to Dobson, this dynamic has reduced inventory and kept prices elevated. “Not only do you create this exponential demand from consumers, but then when rates go up, you lock all of the homeowners in place,” he says.
Property taxes and insurance costs add additional pressure. “The mortgage payment’s fixed, but the taxes and the insurance aren’t,” he says. He notes that rising property values have boosted local government revenues without corresponding rate reductions. “If the local government didn’t change their rate, their budgets would still go up 60%,” he says.
Debates over institutional investors, according to Dobson, misunderstand the market. “Eighty-five percent of our residents can’t get a mortgage in today’s mortgage market,” he says. He rejects the idea that investors crowd out buyers. “The demand is coming from the people you won’t give mortgages to,” he says.
He warns that proposed restrictions on large investors could backfire. “It’s going to severely limit access to housing for American families,” he says. “You’re going to limit the supply of access to those better communities to the people who need to rent.”
Dobson also challenges common narratives about the 2008 financial crisis. “It was never a subprime crisis,” he says. “It was a mortgage fraud crisis.” He explains that widespread misrepresentation by borrowers and lenders drove defaults, rather than the credit quality of borrowers alone.
Expanding access to housing, he says, requires accepting tradeoffs. “Avoiding foreclosures means avoiding access to housing for millions of Americans,” he says. According to him, policymakers must allow more flexibility in lending while managing risk responsibly.
On the supply side, Dobson sees regulatory barriers as a major obstacle. “The government tells you what you can build,” he says. “So the market can’t really design for the consumer.” He points to local rules that mandate features like garages, which add cost without always adding value. “Ten percent of the price of the home is in this room that’s for the cars,” he says.
Dobson believes states like Texas can lead by loosening restrictions and encouraging innovation. “Have we gone too far in minimum viable product?” he says. He supports statewide standards that override local rules to allow more flexible housing designs and higher density.
“The state has the stomach to set what local governments can do,” he says.
Housing affordability, according to him, is not a single national problem with a single solution. “Your solution is going to be different in Boston than it is in Austin,” he says. Supply remains the common thread, though he emphasizes that expanding access to mortgage credit is just as critical.