The 21st Century ROAD to Housing Act represents a bipartisan acknowledgment of the nation’s severe housing shortage, estimated at over 4 million units. By combining zoning reforms, planning grants, limits on institutional investors in single-family homes, updates to financing programs and incentives for denser development, the legislation aims to boost long-term supply. Passed recently with strong majorities, it is a positive step forward. Yet its changes resemble the Titanic attempting a wide turn – large, complex and slow to deliver meaningful relief at the community level.
Housing is an inelastic asset class. Moreover, new construction faces regulatory hurdles, labor shortages, material costs and lengthy permitting timelines. Material gains from added supply often take years, sometimes decades, to filter through markets and ease affordability pressures for average families. While the ROAD (Renewing Opportunity in the American Dream) Act addresses structural barriers, it offers limited immediate impact on existing inventory or targeted demand. Two straightforward policy adjustments could complement it by unlocking supply quickly and improving accessibility for essential workers.
Supply-Side Fix: Double the Capital Gains Exclusion on Primary Residences
Millions of long-time homeowners, particularly empty-nesters and retirees, are effectively locked in place by outdated tax rules. Under current law (Section 121), sellers of a primary residence can exclude up to $250,000 in capital gains for single filers or $500,000 for married couples filing jointly, provided they meet the two-out-of-five-year ownership and use tests. This threshold, set in 1997, has never been adjusted for inflation despite explosive home price appreciation — often exceeding 300% in many markets since then.
In high-cost areas like California, many homeowners face six-figure tax bills on gains above the cap. This “stay-put penalty” discourages downsizing, relocating for retirement or moving closer to family. Studies show capital gains taxes meaningfully reduce homeowner mobility; even modest increases in the tax burden can suppress sales rates. The result is reduced inventory of larger family homes, which could otherwise cascade through the market as sellers buy smaller properties.
Doubling the exclusion to $500,000 for singles and $1 million for joint filers would be a simple, immediate tax code tweak that could function as low-hanging fruit in the basket of possible supply solutions. Specifically, it would release substantial locked inventory without requiring new construction. Increased transactions would generate economic activity, additional property tax revenue from new owners and greater market fluidity — all at relatively low net fiscal cost when considering dynamic effects and eventual realization of gains. This targeted relief prioritizes middle-class homeowners who built equity over decades while directly addressing the supply crunch.
Demand-Side Fix: Expand VA-Style Loans to Community Heroes
Even with more supply, many essential workers cannot afford homes near their jobs. Teachers, nurses and social workers, the backbones of stable communities, often endure long commutes that contribute to burnout, high turnover and reduced service quality. Research links poor jobs-housing fit to longer commutes, especially in coastal metros, exacerbating staffing shortages in schools and healthcare.
The solution: Create the “T.E.A.C.H.” Homes Program (Teachers and Essential Accessible Community Heroes). This impactful, real-word acronym directly centers teachers while embracing broader community heroes (nurses, social workers, and similar vital roles). It evokes education, guidance, and uplift; core values these professionals embody. Yes, I came up with this acronym myself and yes, I welcome anyone with the connections and political capital to steal it immediately as long as it is acted upon with alacrity. Modeled on the successful VA loan framework, it would extend 0% down payment loans with government-backed guarantees and a low fixed 2% interest rate to qualified participants. Eligibility could require professional certification and a minimum service commitment in the area, with possible income or geographic targeting to high-need regions.
VA loans have proven effective at enabling homeownership with low default rates, building wealth for service members while stabilizing communities. Extending similar terms via T.E.A.C.H. would reduce recruitment and retention costs for public institutions, allow workers to live near the communities they serve and strengthen the “missing middle” of housing demand. It directly tackles accessibility without broad market distortion, pairing naturally with supply-side efforts.
These two fixes are complementary policy levers — one unlocking existing stock, the other enhancing demand from high-social-value workers. Unlike the broader, slower-moving provisions of the ROAD Act, they can be implemented swiftly through targeted legislation or amendments. They address both sides of the market equation efficiently, respecting housing’s inelastic nature while delivering faster, tangible results.
America’s housing crisis demands more than incremental turns. By doubling capital gains relief and launching the T.E.A.C.H. Homes Program, policymakers can inject immediate momentum into a market desperately needing it thus freeing inventory, empowering essential workers and teachers, and helping restore the dream of homeownership for the next generation. Congress should act on these commonsense reforms now.
Lisa Ansell is the Assoc. Director of the USC Casden Institute and Lecturer of Hebrew Language at Hebrew Union College-Jewish Institute of Religion Los Angeles.
