December 28, 2021
State solutions to make affordable housing available to more Americans
Higher price tags are showing up more frequently these days—on everything from groceries to housing. In fact, the Federal Housing Finance Industry noted in late November that US house prices rose 18.5 percent over the last year.Home prices are rising much faster than income, threatening to price all but the wealthiest buyers out of the market. Owning a home—once a pillar of the American dream—is now out of reach for millions of American families.
A lack of housing supply is a big reason why homes are so unaffordable right now. The demand for housing has surged while the supply has failed to keep up. As the Maine Policy Institute points out, the number of newly built housing per capita in the United States has fallen 50% over the last 40 to 50 years.
Onerous zoning laws and burdensome regulations are driving this housing shortage by making it expensive and difficult for developers to build more housing options. The good news is that states can take steps to address this problem. A Network of state and local policy organizations is already encouraging policymakers to adopt reforms that reduce these regulations, allow developers to meet demand, and make affordable housing options more available.
When you think of a state known for expensive houses, California is no doubt one of the first states that crosses your mind. The Golden State holds the title as the third-most-expensive state in terms of cost of living. Think tanks, such as the Pacific Research Institute, have been promoting policies and reforms that California can implement that will increase supply and alleviate the high cost of housing.
In a recent blog post, the Pacific Research Institute argued the underlying issue driving the housing crisis is the thicket of rules blocking the new development of homes. In an op-ed for the Times of San Diego, the Institute argued green building mandates will increase the cost of housing in California. And in the policy brief, “Unaffordable,” PRI noted California housing is expensive because of a severe shortage that is the result of government policies that have disincentivized home building.
The Grassroot Institute of Hawaii has been advocating for reforms that would increase housing supply and lower costs in Hawaii, a state with the highest housing costs in the country. These reforms include reducing zoning laws and regulations, making more land available, and lessening the need for state and county approvals of projects under a certain size.
In October 2021, Grassroot conducted and highlighted a survey that found that 97 percent of Hawaii residents think the cost of housing in the state is too expensive. The survey also found that residents support adding land and reforming zoning laws to increase housing.
Grassroot is also finding creative ways to promote these findings and reforms. In September 2021, executive vice president of the Grassroot Institute of Hawaii, Joe Kent, went viral on Tik Tok for a video on Hawaii’s high cost of housing. The video received more than one million views.
In August 2021, the Maine Policy Institute submitted testimony to the Commission to Increase Housing Opportunities in Maine. The Institute noted that, in many ways, housing unaffordability is a symptom of a weak economy. The Institute highlighted how targeted incentive policies that favor certain groups negatively affect the overall fiscal health of states and can play a role in high housing costs. States like Maine should instead focus on lowering costs for everyone by cutting taxes and fees and removing regulations.
In addition, Maine Policy argued local deregulation is the path to relieving Maine’s housing crunch. States should remove burdensome local ordinances such as parking requirements for new construction, restrictions on accessory dwelling units (ADUs), and building and permitting fees.
The Center of the American Experiment highlighted how the housing shortage in Minnesota’s two biggest cities, St. Paul and Minneapolis, is the worst in the nation. What’s more, Minnesota is expected to be 40,000 houses and apartments short of what’s needed over the next five years to keep pace with population growth.
Through op-eds, blog posts, and other outreach, American Experiment is advocating for reforms that reduce housing prices and increase supply for Minnesota residents. To tackle the state’s housing crisis, American Experiment argues lawmakers should focus on removing impediments to housing construction, namely excessive fees and regulations.
In the November 2021 election, to address the housing crisis, Minneapolis and St. Paul residents voted to enact rent control, a policy that imposes a maximum rent that a landlord can charge a tenant. In a report, American Experiment argued rent control is a harmful and ineffective policy and will exacerbate the housing crisis in the Twin Cities.
The Frontier Institute highlighted how local planning departments can often take months to approve building permits. In Missouri, permit approvals can take 10-12 weeks and add more than $20,000 to the cost of new developments. Frontier also noted that one of the biggest factors constricting the supply of housing in Montana is zoning and building regulations imposed by local governments.
In a blog post, Frontier asked readers to “Imagine instead if a developer could walk into a city permit office with their plans, walk out with a permit, and start construction that same day.” Frontier highlighted how Phoenix, Arizona, is now known as the “24-hour city” for implementing a system that allows business owners to start the application for a building permit and receive an approval for that permit within 24 hours. Frontier encouraged policymakers in Montana to consider implementing innovative reforms like Phoenix’s 24-Hour City.
The Josiah Bartlett Center for Public Policy has been reiterating that rolling back bad ordinances will increase housing supply in New Hampshire—a state in dire need of more housing. The Center also released a poll in May 2021 that found that New Hampshire residents are willing to relax local housing regulations in exchange for lower prices.
The Libertas Institute highlighted how housing prices in Utah have increased, on average, by more than $100,000 over the last year. Libertas also explained how minimum lot requirements, or a policy that controls the size of property that can be created on a zone-wide basis, exacerbate the housing crisis and disproportionately harms lower-income people. Libertas commended Cedar City, Utah, for ending this practice and taking a first step towards affordable housing.
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