>The real problem is that zoning is decided at the local level; local turnout is not very high, so it doesn’t take that many concerned homeowners to overthrow someone who is too pro-growth.
Hence removing the subsidies or at least making explicit the cost of subsidies, so people are incentivized to go out and vote for increases in supply. Another option is to hand over ownership to government and make everyone do land leases to make them participate in the market and therefore vote the “right” way. Not a perfect solution of course.
The problem is that, in general, wealthy and older people are more likely to turnout and vote, and more likely to participate in lower level elections, and this class of people is well-correlated with owning homes. So homeowners have quite a lot of power even compared to renters, and they are more than happy to flex it. They don't really care that there are subsidies, because they're the primary beneficiaries.
Hence removing the subsidies or at least making explicit the cost of subsidies, so people are incentivized to go out and vote for increases in supply. Another option is to hand over ownership to government and make everyone do land leases to make them participate in the market and therefore vote the “right” way. Not a perfect solution of course.