To add to that, while incentivizing supply increases we should also look to protect the developers from another future crash. Last time around tens of thousands of small to medium sized builders were financially ruined and left the industry entirely because they were left holding the bag on entirely too much inventory. That’s a big part of why the houses we need today don’t exist and likely won’t be built for another 5-10 years. I’m not saying a “too big to fail” type bailout, but a federal housing insurance program that builders can buy into and have a rescue net to sell inventory into. This could help create a diverse section 8 housing pool while keeping builders afloat.

I think the most elegant way to achieve this is to simply shift the current property tax to fall on land value, rather than land value + building value. That way, people's tax bills don't go up when they improve their house or build on their land. Most people who actually live on that land would see an overall decrease in tax bills because most of their property value (the building) no longer gets taxed, but empty lots and lots with condemned or run-down buildings see their bill go up significantly, forcing them to sell to someone who's actually going to do something with the property.

Combine this with zoning and permitting reform to lower construction costs, and I think that will help the situation a lot.