Housing affordability and the limits of growth models: A critical review of Reisenbichler (2025) through the roof

This book is a particularly timely contribution, as housing affordability has returned to the forefront of European and American political agendas. The book compares housing finance public programs in the United States and Germany from the 1930s to today. It will be of particular interest for scholars of housing studies and comparative political economy as it seeks to contribute to the literature on growth models, policy feedback, and the infrastructural power of the state.

The book seeks to explain two sets of variations: cross-national and temporal. From a cross-national perspective, Germany is characterized by a “restrictive” housing finance regime, whereas the United States have a more “generous” and deregulated system. Temporally, while both countries provided substantial state support for housing finance in the mid-twentieth century, German policymakers retrenched housing programs in the early 2000s and the United States continuously expanded state support over time. The core argument of the book is that macroeconomic imperatives ultimately determine housing policies and that different growth models—the United State and Germany being ideal-types of demand-led and export-led growth—created different housing policy trajectories. In Germany, lower rents and house prices help offset lower labor costs, thereby reinforcing an export-led model reliant on wage restraint. In the United States, by contrast, housing inflation fuels consumption and access to credit. The analysis draws on both primary and secondary archival sources as well as 35 interviews with a broad range of policymakers.

Chapters 2 and 3 compare housing programs in both countries from the Great Depression to the 1960s. Chapter 2 shows how American policymakers identified the growth-enhancing potential of housing policy during the Great Depression and how New Dealers turned housing into “the wheel within the wheel” driving the broader economy. Housing then became a cornerstone of the postwar mass-consumption economy. In contrast, Germany implemented extensive supply-side housing programs, as postwar housing shortages constrained industrial production and labor mobility, and imposed rent controls to contain living costs and wage pressures (chapter 3). Despite the CDU’s ideological preference for homeownership, the Länder allocated the bulk of social housing funds to the rental sector because it better served regional industrial needs. The author thus seeks to tell the “untold story” of how the postwar “housing miracle” contributed to Germany’s broader “economic miracle.”

Chapters 4 and 5 extend the comparison from the 1970s to the 1990s. The author traces the now well-documented process of “state-driven financialization,” demonstrating how the Fed discovered the “wealth effect” in the inflationary context of the 1970s, enabling Americans to “treat their houses like credit cards.” By contrast, in the 1970s German policymakers (chapter 5) began to reorient housing programs as housing shortages no longer constituted a macroeconomic constraint. Social Democrats under Schmidt’s government shifted toward the promotion of homeownership as “good middle-class politics,” while Christian Democrats under Kohl’s government went further by experimenting with demand-side housing policies aimed at establishing homeownership as the “fourth pillar of retirement and private savings”—although they returned to social housing programs after the reunification. The author concludes that the “growth regimes need not dictate policies,” a claim that is puzzling insofar as it appears to contradict the book’s core argument.

Chapters 6 and 7 form the core of the book’s comparative puzzle. Since the 2000s, American policymakers have “doubled down” by effectively nationalizing housing finance, while German policymakers “doubled back” by retrenching housing programs. In the United States, measures initially conceived as temporary—such as the bailout of Fannie and Freddie and the Federal Reserve’s large-scale purchases of housing bonds—became entrenched as a new normal. In Germany, Kohl’s post-unification housing stimulus produced housing surpluses and weakened the construction sector. Policymakers retrenched housing programs to reduce fiscal deficits and correct capital misallocations. In doing so, they also deprived the federal government of key instruments to address future housing shortages. Chapter 8 concludes by situating the current affordability crisis within the paradoxes of both housing policy regimes, showing how distinct trajectories produced similar affordability outcomes. It then turns to additional cases to show how the book’s findings can be extended to other national contexts.

The book is remarkable for the clarity of its argumentation, its strong comparative design, and the thorough and systematic way in which the evidence is marshalled. It also exhibits a nice combination of primary and secondary sources in order to support the author’s argument. Even specialists of one or both cases will likely come away from the book with substantial new insights.

While the title and cover suggest that housing inflation and affordability are the core focus of the book, these issues are only addressed as byproducts of its primary concern: housing policy regimes and their relationship to different forms of capitalism. In light of this, the book would have benefited from positioning its contribution more clearly, notably in relation to the already extensive comparative political economy literature on housing (Schwartz and Seabrooke, 2008) and existing typologies of housing regimes (Kemeny and Lowe, 1998). A clearer discussion of the differences in the welfare systems between the US and Germany and of the emergence of “asset-based welfare” (Benoît and Hay, 2025; Doling and Ronald, 2010) may also have enriched the book, since US housing policy is often called a “hidden welfare state” (Kholodilin et al., 2023) and German housing policy fuels an export-led model relying on wage devaluation. Similarly, the absence of methodological clarification regarding the historical inquiry makes it difficult to assess what constitutes an original empirical contribution and what amounts to a synthesis of existing scholarship.

The main shortcoming of the argument lies in its hermeneutic closure, which may occasionally invite questions about risks of overinterpretation. Strong conceptual framing leaves limited room for alternative readings—for example, political and expert cultures, and space and land availability—which are not discussed in the introduction. For instance, chapter 4 arguably overstates the extent to which the 1986 Tax Reform Act was favorable to the housing sector. Realtors blamed TRA 1986 for “having triggered a persistent weakness in the real estate sector” because of the way it treated capital gains and passive income. ¹ Moreover, it leaves an important paradox insufficiently addressed: how could self-described “supply-siders” respond to post-Keynesian challenges with an expansion of demand-side housing policies?

The explanatory framework is indeed highly functionalist, leaving limited room for interpretive conflicts and intra-state divergences. This question—who speaks for the growth model?—is particularly important for the interpretation of the data, as it shapes the weight the researcher assigns to different co-existing discourses in constructing their own narrative. As a result, the account remains surprisingly static despite the historical nature of the narrative. Indeed, growth models are presented as having linear causal effects on housing policies, yet this fails to explain why the same model produces contrasting outcomes in post-war Germany and the early twentieth century, or why policymakers can at times act against the growth regime—and causal mechanisms should not depend on arbitrary chronological boundaries. The book reveals the limits of growth models when understood primarily as institutional arrangements. Yet growth models are also cognitive frameworks, namely sets of representations through which policymakers perceive and interpret economic reality.