The political left has made housing one of its central political issues—and has used it to win elections, for example, in New York City and Berlin. Left-wing politicians persuade voters that more government regulation, such as rent controls, will improve the housing situation. Yet numerous scientific studies have demonstrated that this is not the case. For example, Konstantin Kholodilin of the Institute for Economic Research (DIW Berlin) https://www.sciencedirect.com/science/article/pii/S1051137724000020?via%3Dihub analyzed more than 200 studies on rent control and concluded that rent controls have numerous negative side effects that can outweigh their intended benefits.
Housing shortages and rising rents are among America's most pressing economic problems. Politicians often respond by proposing more subsidies, rent controls, or government housing programs. But a new ranking from the Cato Institute approaches the problem from a different angle: How much freedom do property owners actually have to build homes on their own land?
On October 22, 2026, the libertarian Cato Institute released its new Freedom in the 50 States report, including a separate Housing Freedom ranking for all 50 U.S. states. The index provides an interesting comparison of how government regulations restrict or protect property rights in the housing market.
How Housing Freedom Is Measured
The index evaluates ten variables divided into four groups.
First, it examines whether homeowners are allowed to build accessory dwelling units (ADUs), such as small apartments for relatives or rental units in their backyards. Many local governments prohibit these arrangements or impose costly restrictions.
Second, it assesses minimum lot-size requirements. Such rules can force developers to build houses on unnecessarily large plots, making smaller and more affordable homes impossible.
Third, the index examines restrictions on different housing types, including duplexes, triplexes, and manufactured homes. In many American communities, zoning laws effectively prohibit anything other than detached single-family houses.
Fourth, it evaluates mandatory parking requirements and rent controls. Parking mandates increase construction costs by forcing developers to provide spaces regardless of actual demand. Rent controls interfere with freely negotiated contracts between landlords and tenants.
The index combines information from organizations including the National Zoning Atlas, the Mercatus Center, the American Enterprise Institute, the Parking Reform Network, and the National Apartment Association.
An important methodological distinction: The ranking measures regulatory freedom, not housing affordability itself. A state can have relatively inexpensive housing for reasons unrelated to regulation, such as weak demand or abundant land. Conversely, reforms may take years to affect construction and prices.
The Winners: Idaho, Vermont, and Montana
Three states receive the highest grade, A: Idaho ranks first, followed by Vermont and Montana.
All three have enacted significant statewide reforms that restrict the ability of local governments to prevent housing construction.
Idaho demonstrates how a state can strengthen property rights by limiting local regulatory barriers. Rather than allowing every municipality to impose its own restrictive rules, statewide reforms give property owners greater opportunities to use their land.
Vermont's second-place ranking is particularly interesting. The state is not generally associated with libertarian economic policies. Nevertheless, its housing reforms have moved in a market-oriented direction, demonstrating that deregulation need not be a partisan issue.
Montana ranks third, reflecting substantial reforms designed to permit more housing types and reduce local restrictions on residential development.
The common principle is straightforward: Property owners should have greater freedom to decide what to build, rather than requiring political permission for every change in land use.
The Losers: Nine States Receive an F
At the opposite end of the ranking, nine states receive the lowest grade, F: Oklahoma, Pennsylvania, Georgia, Wyoming, Mississippi, Minnesota, Alabama, Louisiana, and Michigan.
Michigan occupies the bottom position, with Alabama and Louisiana tied immediately above it.
What these states have in common is not necessarily high housing prices. Rather, they have failed to implement substantial reforms while retaining comparatively restrictive regulatory frameworks.
The inclusion of Oklahoma, Georgia, Wyoming, Mississippi, Alabama, and Louisiana is revealing. These states are often associated with conservative politics and support for free enterprise. Yet their housing policies illustrate how even politicians who advocate free markets in principle may tolerate extensive government interference with property rights.
The ranking also challenges the assumption that restrictive housing policies are exclusively a problem in Democratic states.
Governors Are Ranked Separately
For the first time, the Cato report also evaluates governors according to their contributions to economic and personal freedom.
In housing policy, seven governors receive an A, led by Idaho's Brad Little, Montana's Greg Gianforte, and Vermont's Phil Scott. They are followed by Connecticut's Ned Lamont, Texas's Greg Abbott, Maine's Janet Mills, and New Hampshire's Kelly Ayotte.
This is another striking finding: Democratic governors can outperform Republican counterparts when judged by actual reforms rather than political rhetoric.
Nine governors receive an F in housing freedom, including Oklahoma's Kevin Stitt, Georgia's Brian Kemp, Pennsylvania's Josh Shapiro, Minnesota's Tim Walz, and Michigan's Gretchen Whitmer.
The report thus distinguishes between a state's existing regulatory framework and the actions of its political leadership.
Why Housing Freedom Matters
The fundamental economic argument behind the index is that restrictions on construction artificially limit supply.
When governments prohibit duplexes, require large lots, mandate excessive parking, or prevent homeowners from creating additional apartments, they make it more difficult and expensive to respond to housing demand.
Rent controls create additional problems. Although they may benefit some existing tenants in the short term, they can discourage investment, reduce the availability of rental housing, and weaken incentives to maintain properties.
The Cato ranking is not a direct test of whether deregulation has already lowered rents. It is a measure of whether states are removing obstacles that prevent markets from responding to demand.
This distinction is crucial. Housing shortages cannot be solved simply by declaring that homes should be affordable. Someone must be willing and legally able to build them.
The report offers an important lesson: The most meaningful housing reforms are not necessarily those that spend more taxpayers' money. They are often those that allow property owners, builders, and investors to do what government regulations previously prevented.
Conservatives, libertarians, and the right have all too often left the issue of housing to the left, even though it is precisely the left’s statist ideology that creates the problems. Yet the left then blames capitalism for these problems, much like a thief shouting, “Stop, thief!”
