It would be hard to reduce the relevant price level and financing costs, but one could drop the price below the current policy trajectory (based upon this post). Ignoring political feasibility, it’s still useful to know what economic theory and empirics would say works.
- Reduce tariffs.
- Reopen the Strait of Hormuz, Strait of Bab al Mamdab, reduce shipping insurance costs
- Increase legal immigration
- Reduce removals of undocumented immigrants
- Decrease the trend in the budget deficit
- Rescind increases in ACA marketplace premiums
I’m not asserting these are optimal policies, just that if affordability is an important issue, then these measures would address the problems.
Essentially, these are undoing Trump 2.0 policy actions, where the tariff war and US-Iran war constituted cost-push shocks, decreased immigration and forced removals constituted a supply shock, and the expanded budget deficit induced crowding out.
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