After decades of inaction, states are finally stepping up on housing

The affordability crisis is forcing politicians’ hands.

For years, the easiest thing to do about building new housing was nothing.

The federal government largely deferred to state and local governments on matters of land use, and states mostly deferred to local governments, which typically defer to their home-owning constituents who back restrictive zoning laws that bar new construction.

That’s slowly changing as the housing supply crisis ripples across the country. Experts say the US is short somewhere between 3.8 million and 6.8 million homes, and most renters feel priced out of the idea of homeownership altogether. The lack of affordable housing is causing homelessness to rise.

In Washington, DC, Congress has held more hearings on housing affordability recently than it has in decades, and President Joe Biden has been ramping up attention on the housing crisis, promising to “build, build, build” to “bring housing costs down for good.”

But it’s at the state level where some of the most consequential change is taking place.

Over the last five years, Republican and Democratic legislators and governors in a slew of states have looked to update zoning codes, transform residential planning processes, and improve home-building and design requirements. Some states that have stepped up include Oregon, Florida, Montana, and California, as well as states like Utah and Washington. This year, Maryland, New York, and New Jersey passed state-level housing legislation, and Colorado may soon follow suit.

Not all state-level bills have been equally ambitious in addressing the supply crisis, and not all states have been successful at passing new laws, especially on their first few tries. And some states have succeeded in passing housing reform one year, only to strike out with additional bills the next. Real housing reform requires iterative and sustained legislative attention; it almost never succeeds with just one bill signing.

Trying to determine why exactly a housing reform bill passes or fails on the state level can be difficult, though advocates say it certainly helps when a governor or other powerful state lawmaker invests time and political capital in mobilizing stakeholders together. Given that housing challenges are not spread equally across a state, sometimes it can be hard to decide whether to pass statewide laws that apply equally to all communities or to pass more targeted legislation aimed only at certain areas.

Partly due to pressure from voters and from more organized pro-housing activists, legislative trends are starting to emerge. More states and housing experts are thinking not only about passing laws to boost housing production, but also about how best to enforce those laws, close loopholes, and demand compliance.

States can make it easier to build more housing in a wider variety of places

While states typically grant local communities a lot of discretion in land use policy, more lawmakers are realizing that balance may have tilted too far.

As researchers with the Federal Reserve Bank of Minneapolis outlined last fall, some states are now looking to increase housing production by enabling more multifamily housing and accessory dwelling units (ADUs) to be built without having developers first seek approval from local planning agencies or elected boards. This accelerated construction process is known as building “by right.”

For example, Oregon passed a law in 2019 allowing fourplexes (a multifamily home that typically houses four families under one roof) to be built anywhere in large cities and for duplexes to be built anywhere in mid-size cities. Before, a developer would have needed to seek special permission to build such housing.

States like Utah and Massachusetts are incentivizing the construction of new multifamily housing near public transit, while states like California and Florida are making it easier to build residential housing in places zoned for retail. Other states, like Maine and Vermont, are making it easier to build ADUs, which are second (and smaller) residential units on the same plot of land as one’s primary residence, like apartments or converted garages.

State lawmakers sometimes impose new rules on localities to adjust their housing planning requirements, which can mean lowering the barriers builders must go through to begin construction or incentivizing cities to set more ambitious targets for production. Sometimes it means easing requirements like minimum lot sizes or parking spot mandates.

Not all state-level bills will move the needle on the housing crisis

Under pressure to do something about the housing crisis, some state lawmakers are advancing bills that allow politicians to claim they’re taking action, although the legislation itself is weak and unlikely to make big dents on the various problems. Some bills may even make affordability issues worse over the long term.

For example, after failing to pass housing reform last year, lawmakers in New York came together again this year to push something through. Democratic Gov. Kathy Hochul and her allies in the state legislature are cheering their recently agreed-upon housing package, which includes tenant protections and incentives to spur new construction, but experts and activists say it lacks real ambitious zoning and production measures and will be unlikely to drive new affordability.

Likewise in Maryland, Democratic politicians are cheering the passage of a new statewide housing reform package that includes renter protections and incentives to spur new affordable and dense development, though Yes-In-My-Backyard pro-housing advocates concede they do not expect the legislation to create much new housing, at least in the near term. Still, given that it was housing advocates’ first real attempt at passing statewide legislation in Maryland, they are hailing it as an impressive first step.

“This is the first time the Maryland legislature overrode local zoning in a pro-housing way, and I would say this is a surprisingly drastic shift from the status quo even though it’s not enough,” said Tom Coale, a housing lobbyist in Maryland.

When it comes to state-level housing reform, implementation and compliance matter

Passing legislation for housing reform on the state level is often just the first step, as opponents then sometimes seek to challenge the new laws in court or localities search for loopholes or other ways to avoid compliance. Sometimes lawmakers water down housing production mandates and other enforcement mechanisms before the bills even pass through the legislature.

While it’s not uncommon for local communities to try and avoid compliance when a housing law is first passed, some states have also been firing back in subsequent sessions to close loopholes and ramp up penalties for local governments. While some statutes have strong enforcement mechanisms built in to begin with, many lawmakers are recognizing the housing reform process will just need to be dogged and responsive to resistance and new challenges.

Housing experts with the Lincoln Institute of Land Policy say it’s likely to take at least three to five years after a statewide policy is passed before the public should expect to see any real changes in housing production, and they urge patience before claiming a reform has failed or succeeded.

“Many of the ambitious state housing policies that have been adopted are still in the early stages of implementation, so we don’t yet have definitive evidence about what works and what doesn’t,” they wrote in September. “Without realistic expectations about this time frame, pro-housing advocates may get discouraged, while opponents claim that zoning changes are ineffective—all before the policies have kicked in.”