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How States Are Addressing the High Cost of Housing

Housing used to be primarily a local concern. With millions of units needed, state policymakers are looking for ways to boost supply.

Editor's Note: This article appears in Governing's Spring 2024 magazine. You can subscribe here.

A year-and-a-half into her term as governor, Kathy Hochul decided to go big. The Democrat told lawmakers last year that New York needed to build 800,000 new units over the next decade. Her plan included a combination of tax incentives, zoning changes and mandatory production goals for local communities, with an emphasis on building near transit stops. A shortage of housing was at the root of the state’s affordability crisis, Hochul argued. New York was losing population partly because people couldn’t afford to live there. Other state governments were pushing bold new housing policies and New York had fallen behind the curve.

Within a few months, her plan was in ruins. There were some legislative Democrats who applauded the initiative. “It was directionally the right thing to propose and courageous to propose it in the way she did,” says Brian Kavanagh, the chair of the state Senate housing committee. But too many others balked, and Hochul backed off.

Opposition was especially intense in the Long Island suburbs. Many suburban residents didn’t want to be forced suddenly to make single-family neighborhoods much denser. For their part, municipal leaders didn’t want the state dictating the terms of local housing policy. “We all recognize there’s a housing crisis down here, but the answer isn’t to tell us what to do,” says Don Clavin, the town supervisor in Hempstead, a densely populated suburb close to New York City. After Hochul announced her plan, Clavin says he was stopped repeatedly at train stations, baseball fields and on the street by residents telling him they were opposed to it. Long Islanders of every political persuasion were seemingly united in opposition. “The governor’s attempt to say, ‘You’ll do it my way,’ was rejected by everybody,” Clavin says.

But the fight over housing in New York isn’t unique, and it’s not over. Questions of housing and land-use policy have been considered the province of local governments for decades, reaching back as far as the invention of zoning in the early 20th century. In some respects, it’s been the most meaningful power cities have and the lever over which local citizens have the most direct control. Until recently, too, affordable housing has been seen mostly as a big-city problem.

In the last decade, however, the high cost of housing — as well as questions about the quality, accessibility and stability of housing, especially for low-income people — have become widespread concerns in suburban and rural areas as well. State policymakers have begun advancing ambitious housing policies of their own, and not just in coastal areas. To date, no state or city has figured out how to address the lack of affordable and accessible housing at the scale that’s needed. But many experiments are underway, and the pressure on lawmakers at every level of government to act is only growing more intense.

Rent Is Too High

The term “crisis” is so overused that it’s close to losing its meaning, but the lack of affordable housing in the U.S. is an urgent problem by any definition. Households are forming faster than new housing is being built, resulting in a nationwide shortage of at least 2.5 million homes, according to one analysis. The underproduction of housing is getting worse everywhere, with the problem shifting especially to suburbs and rural areas. There isn’t a state in the country with an adequate supply of affordable homes for the poorest residents, according to the National Low Income Housing Coalition.

Half of all renters now spend more than 30 percent of their income on housing, the standard measure of affordability, according to a recent report from the Joint Center for Housing Studies at Harvard University. That represents 22.4 million households, a record high. Some 12.1 million of those households are now spending more than half their income on rent. Rents have outpaced income growth in recent years and more people were homeless in 2023 than ever before.
America's Rental Housing - Change in Residual Income Since 2001 Chart
(America's Rental Housing / Joint Center for Housing Studies of Harvard University)

California has one of the worst housing problems of any U.S. state, with astronomical housing costs in its biggest metro areas and a growing homelessness problem almost everywhere. It’s also led the pack in pushing statewide housing policies meant to increase supply. Scott Wiener, a former member of the San Francisco Board of Supervisors, was elected to the California Senate in 2016 and began introducing housing-related legislation soon after. His efforts have been aligned with — and helped to advance — the YIMBY (yes in my backyard) movement, which is organized around loosening zoning rules to promote more housing.

Wiener and his colleagues have advanced scores of bills related to housing policy over the last half-decade, chipping away at regulations they believe add to the cost of housing, while pushing localities to permit more construction. “Housing is usually the biggest expense that people have. It is crushing the middle class. It is crushing low-income people,” Wiener says. “States have a big role to play in setting the basic ground rules for zoning for enough housing.”

Wiener believes his biggest impact may have come from a series of bills that ultimately failed to pass. He wanted to allow dense new housing developments in areas close to transit stations across the state, whether local zoning permitted it or not. Although his bills along those lines failed, they galvanized efforts to address housing costs through state action on zoning.
Scott Wiener
California state Sen. Scott Wiener has made housing legislation a mission and says states play a big role in changing the landscape. (Office of Sen. Scott Wiener)
He’s continued to focus on housing, although many of his more recent bills have been less openly confrontational against local control than his prior attempts. Broadly, Wiener says the state should work to establish a system in which zoning rules are well-established and local discretion over individual housing projects is minimized, with cities required to help reach state housing goals. The California Legislature has passed more than 100 housing-related bills since 2017. Those laws have increased pressure on localities to increase housing production. The Legislature has become significantly more aligned with pro-housing YIMBY policies in that time. “The politics are a problem,” Wiener says, “until they’re not a problem.”

California cities have received the state’s efforts variously with open arms or raised fists. Some cities have filed lawsuits seeking to overturn state laws. State Attorney General Rob Bonta, in turn, has sued some cities, seeking to force them to comply with state housing laws. Some local leaders feel caught in the crossfire. The state’s approach “is so broad and sweeping that it doesn’t make sense in a lot of ways,” says Tammy Kim, a city councilmember in Irvine. But she recognizes the state’s interest in intervening in places that are steadfastly preventing new housing projects. “I get frustrated coming from a community that has built, when my neighbors are coming up with every reason not to build,” Kim says.

Looking for Alternatives

Other states are making programmatic efforts to add new housing in traditionally single-family neighborhoods. In 2019, Oregon passed the first statewide law permitting multi-unit buildings in single-family areas, following a high-profile local law that upended single-family zoning in Minneapolis. Washington and California have since passed similar laws. Massachusetts passed a law in 2021 requiring cities served by the Massachusetts Bay Transportation Authority to allow developers to build multifamily housing in certain areas without seeking special zoning exceptions. Rhode Island lawmakers have discussed creating a public developer that would build mixed-income housing itself, something that’s already being done in Montgomery County, Md. A similar effort is being considered in New York state, too.

But it’s not just jurisdictions led by Democrats that are seeking big changes. Utah lawmakers have passed a series of housing-related bills in recent years, including allowing accessory dwelling units. Some Republican legislators there are pushing new legislation to promote more medium-density housing in suburban areas. Florida passed a law last year promoting more residential development in commercial areas and waiving property taxes for projects with lots of income-restricted units. (The bill also banned rent control.) It passed with near-unanimous support. Meanwhile, Montana passed a series of bills requiring cities to allow duplexes and accessory dwelling units in single-family areas and streamlining permitting and project reviews.

Housing grew more costly in Montana throughout the 2010s as population growth outpaced housing permitting, says Chris Dorrington, Montana’s director of environmental quality and the chair of a housing task force appointed by GOP Gov. Greg Gianforte. Urban areas of the state have struggled to keep up with housing demand, while rural areas have struggled to add even small numbers of housing units. It’s an issue that affects every type of community, and the state diagnosed its own regulations and procedures, as well as those in its cities, as major parts of the problem.
Montana Gov. Greg Gianforte
Gov. Greg Gianforte established a housing task force that led to major legislation in Montana, where both urban and rural areas have struggled to keep up with demand. (Courtesy of Office of Gov. Greg Gianforte)

Pennsylvania passed a bill in 2022 called Whole-Home Repairs, which dedicates millions of dollars to help homeowners remain in their homes and to train workers to perform the maintenance. The law was introduced by state Sen. Nikil Saval, who’s a progressive Democrat from Philadelphia, but it garnered support from some rural Republicans whose party controlled both chambers of the Legislature at the time. It keyed in on issues around aging housing stock that cut across most of the state’s communities. The program has begun issuing grants of up to $50,000 to homeowners in all of its counties.

Saval says he expects to co-sponsor a package of housing legislation this year aimed at some of the same zoning and supply issues that other states have targeted in recent years. He’s hopeful it will have bipartisan appeal. “You’re always judging those things: What is the coalition that can overcome naysayers or opposition?” he says. “But I think it is promising that my bill passed even in a Legislature that would otherwise seem to be hostile to a Democrat from Philadelphia, let alone a Democratic Socialist from Philadelphia. It’s promising.”

No Easy Fixes

There isn’t a state where housing is getting substantially cheaper, even with lots of zoning experiments underway. It appears to be the case that restrictive housing policies are associated with higher costs but, perversely, it’s less clear that zoning changes are associated with lower costs. Minneapolis did see a 12 percent increase in its housing stock in just the first five years after it abolished single-family zoning, mostly through new apartment buildings, but rents continued to increase slightly.

Zoning laws are low-hanging fruit for lawmakers — publicly imposed barriers to new housing supply. But they’re far from the only hurdle. Researchers say it’s likely to take a suite of state and local policy solutions, new investments, macroeconomic shifts and, simply, time for the housing crunch to ease. After all, there are a lot of reasons why housing has become so expensive. Some are recent factors such as increased building costs, high interest rates and an uptick in investor purchases of homes. Land values increased by 60 percent between 2012 and 2019, while home prices doubled between 1998 and 2021, according to the federal Government Accountability Office. Other problems are more enduring. Most for-profit housing developments target the high end of the market, providing little new housing for low- and middle-income people. (The average homebuyer is now both older and wealthier than in past decades.)

Most people agree that an undersupply of housing is at the root of the problem: There are more people looking for places to live than there are quality, affordable homes. The challenge is worse for low-income people and people of color. It’s reinforced in many places by exclusionary housing policies. A host of racist housing policies — including federal policies such as redlining and local practices like racially restrictive deed covenants, both of which prevented Black families and members of other groups from buying homes in certain areas — established patterns of racial and economic segregation that persist in American cities. Single-family zoning in many wealthy neighborhoods and suburbs has tended to lock many of those patterns in place, even after the enactment of fair housing laws in the late 1960s.

As much as the housing crisis is a challenge to renters and first-time homebuyers, it’s a benefit to existing homeowners. Scarcity pushes up prices for existing homes and increases home equity for homeowners, which has long been a primary wealth-builder in the U.S. Those same homeowners have tended to have the biggest influence on local land-use policies, often at the expense of new development projects. Opposition grows especially strong in the face of higher-density projects meant to serve lower-income residents.

There’s as yet scant evidence that changes to zoning policy, even sweeping ones, are on their own leading to major growth in overall housing supply, let alone low-cost housing. Part of that is because pandemic-era cost increases and higher interest rates have slowed construction. Some of the most popular changes in approach, such as allowing duplexes and triplexes in single-family areas, aren’t well-aligned with demands in the market, says Yonah Freemark, an Urban Institute researcher who has studied zoning. Just because a city allows duplexes doesn’t mean that developers will want to build them, or that homeowners will demand them. “Generating the additional housing that we want is harder than just changing specific laws,” Freemark says. “We need to be skeptical of assuming that any zoning reform, just because in theory it’s meant to increase housing supply, will result in increased housing supply.”

As housing concerns spread, lawmakers in many states are finding that support for new policies cuts across traditional partisan divisions. But that’s true about opposition as well. Politicians from both parties have opposed state efforts to force local zoning changes, and not just in New York. Montana’s new housing laws are currently the subject of a lawsuit filed by homeowners in the Bozeman area. A judge granted an injunction in January blocking the new laws from taking effect, at least for now. “It’s a mixed political thing,” says Jim Goetz, the Bozeman lawyer who filed the lawsuit. “I consider myself a liberal Democrat, but I don’t think these utopian dreams of planners are worth a damn.”

In the face of resistance from colleagues and local communities, some lawmakers such as Wiener in California have shifted their tactics away from taking big swings in a single bill to making incremental changes over time. After Hochul’s plan failed last year, she returned in January with a much more modest set of incentives meant to encourage cities to build more housing, rather than mandates requiring it. Colorado nearly passed a broad set of housing policy changes last year, but the bill ultimately failed due to resistance in local communities, opposition from Republicans and division among Democrats. Gov. Jared Polis, a Democrat, is making another push for statewide changes in 2024. “Breaking out the concepts into seven or eight different bills allows for distinct but overlapping coalitions to help get each of those across the finish line,” Polis says. “There’s so much more enthusiasm this year to do something on housing costs, which has risen to be the No. 1 issue in our state.”


Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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