In a new housing symposium report, BofA Global Research says there is a “fundamental disconnect between housing policy and the underlying supply shortage,” and voters are fixated on the wrong enemies like interest rates and institutional investors instead of a faceless villain: time itself. Specifically, the problem is the decades‑long failure to build enough homes. While affordability polls as a top concern, the bank’s policy panel warns the politically painful fixes needed to boost supply remain largely off the table, leaving the market “stuck” even as mortgage rates begin to inch lower.

Blame the zoning board, not just the Fed

According to the BofA panel, most housing decisions still live and die at the local level, where zoning rules and “Not‑In‑My‑Backyard” resistance keep new supply from ever getting permitted.

“Most housing decisions are controlled at the local level, where ‘Not‑In‑My‑Backyard’ (NIMBY) dynamics and political resistance to new development remain strong,” the report notes.

That disconnect plays out in how voters explain their own frustration. While affordability “remains a top public concern,” BofA says “most voters blame interest rates or institutional investors rather than the true issue—insufficient housing supply.” Even federal efforts branded as pro‑housing, like the Road to Housing Act, are likely to have “only incremental impact,” mainly by shaving some regulatory friction or funding niche ideas such as modular housing rather than unleashing large‑scale building.

A market ‘stuck’ by chronic undersupply

The core BofA view is that today’s affordability crisis is the product of both a one‑time shock and a much older failure to build. Post‑2020, remote work and pandemic migration created a structural demand surge the construction industry simply couldn’t meet: One symposium presenter estimates starts would have needed to jump to roughly 6 million annual units—a 300% increase—to absorb it.

Instead, supply proved “much less elastic than demand,” and home prices jumped more than 40% in about 18 months before a sharp rate shock locked would‑be sellers into ultra‑cheap mortgages. Existing‑home sales are now hovering around 4 million a year, which BofA notes is a roughly 40‑year low on a population‑adjusted basis, reflecting a frozen resale market and a “lock‑in effect” that could last six to eight years.

Why your payment still feels impossible

On paper, affordability has improved from the absolute trough in 2023 as incomes have risen and mortgage rates drift down from their peak. BofA’s mortgage strategists expect 30‑year mortgage rates to move only gradually, from about 6.5% toward roughly 6% by 2027, as the spread over the 10‑year Treasury normalizes rather than collapses.

But in practice, the bank says, housing is still “restrictive in a historical context”: Elevated prices, taxes, and insurance continue to squeeze monthly payments even as nominal borrowing costs ease. That helps explain why the bulk of demand is now K‑shaped: Move‑up and luxury buyers are still transacting, often using builder buydowns and cash, while first‑time and lower‑income households are stuck renting and waiting for a reset that never quite comes.

Wall Street and non-bank lenders aren’t the main story

BofA also takes aim at another popular villain: big investors and nonbank mortgage lenders. The bank’s research arm has separately argued “restricting big buyers is unlikely to materially affect housing affordability or availability in the near term,” given their relatively small share of the overall housing stock.

At the symposium, panelists said independent mortgage banks (IMBs) are “likely to retain dominance” in originations because Basel III capital rules and legal risk keep large banks from wading back in in a big way. GSE reform, another perennial talking point in Washington, remains uncertain and distant, making it a poor lever for near‑term affordability relief. In BofA’s view, focusing public anger on Wall Street or IMBs risks distracting from the harder, slower work of loosening land‑use rules and actually building more homes.

Why the fix is so politically hard

The report is blunt the solutions are well understood: Allow more density, speed up approvals, and chip away at local rules that make it expensive or impossible to add housing in high‑demand areas. But these are precisely the kinds of changes that generate the fiercest local backlash, even in cities and states that talk the loudest about affordability.

“Affordability is a key voter issue, but proposals to fix structural supply shortages are politically unpopular and lack short-term payoffs,” the BofA policy panel concludes. That leaves national policymakers reaching for softer tools—modest grants, voluntary zoning pilots, standardized community plan templates—while the core bottleneck in city councils and planning commissions goes largely untouched.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.