The Streetlight Effect – July 28, 2025
A new study from NAR argues that releasing federally managed land to developers isn’t a comprehensive solution to the nationwide housing shortage
There’s an old, often-repeated joke which conveys a basic truth about how people sometimes operate: It’s night, and a person is searching for something under a streetlight. A passer-by approaches and asks, “What are you doing?” “Looking for my keys,” the searcher replies.
“Well, where did you lose them?”
“Over there,” the searcher points across the street.
“So why are you looking here?”
“Because the light is better.”
The term for this is “the streetlight effect,” denoting the act of searching for a solution where it’s easiest to look—even if the search doesn’t address the actual problem. This principle comes to mind when considering a proposal to ease the housing shortage by selling millions of acres of federally owned land to developers.
President Trump pledged to do so last year when running for re-election, and more recently a provision of the One Big Beautiful Bill Act would have made 250 million acres of federal land across 11 Western states eligible for sale. The OBBBA land-sale provision, sponsored by Sen. Mike Lee (R-UT), didn’t make it to the final bill as signed into law. However, the idea is still in the air.
In theory, if you’re looking for land, you could hardly do better than knocking on Uncle Sam’s door. The federal government owns 640 million acres, about one-quarter of the total U.S. land mass.
In practice, though, the proposal fails to provide a comprehensive solution to the housing shortage, as a new study from the National Association of Realtors (NAR) makes clear. The reason is that the land is generally not available in regions where it is most needed—not unlike the streetlight that doesn’t illuminate the area where the man who lost his keys should be looking for them.
“Only a small portion of all federal land falls within a U.S. metro,” writes NAR’s Hannah Jones. “Meanwhile, large U.S. metros are where households are feeling the most strain from unaffordable housing, highlighting a mismatch between land supply and housing demand.”
More than one-tenth of the federally owned acreage is in Alaska, where the Bureau of Land Management controls 70 million acres. The population of Alaska? About 741,000 across 663,000 square miles. The population of the Bronx? Nearly twice that of Alaska within 57 square miles.
Although there are a few large Western metro areas that contain BLM managed land within their borders—notably Las Vegas—just 10% of the 900 metro areas nationwide contain BLM land. NAR’s Jones writes that “virtually none of the BLM managed land in the U.S. is in the Northeast,” which is facing a shortfall of approximately 830,000 homes and counting.
Longer term, “a broad increase in housing supply in lower-cost, land-rich regions could eventually help redistribute population pressure,” writes Jones. “More abundant, affordable homes in the West and South might incentivize migration away from high-price, low-inventory metros, but such a shift would require major changes to the U.S. labor market, including expanded remote work flexibility, diversification of economic hubs, and infrastructure investment in newly populated regions.”
Moreover, she writes, “While releasing BLM lands may support new housing supply in select metros across the West and Southwest, it is no substitute for policy reform and upzoning in high-demand urban cores.”
Shortly after the NAR study was published, a bipartisan bill known as the Identifying Regulatory Barriers to Housing Supply Act was introduced in both houses of Congress. It seeks to encourage municipalities to examine, and correct, the choke points in their zoning and regulations.
Such an initiative is certainly as relevant to densely populated metro areas nationwide as it is to smaller communities. Maybe it’s the equivalent of taking a flashlight in hand, crossing to the other side of the street and looking for the keys where you actually dropped them.